Billionaires and millionaires demand: Tax us more!

"We're surprised you can't answer the simple question we've been asking you for three years: When are you going to tax the ultra-rich?"

That question came from the participants of the online campaign "Proud to Pay More", and was addressed to the heads of state and government at the World Economic Forum in Davos. This Wednesday, activists also submitted an open letter calling for a worldwide tax increase for the super-rich. writes Deutsche Welle.

"Return to normality"

What is special about this campaign is that its participants are themselves among the richest people in the world: 260 billionaires and millionaires have come together as a sign of protest against growing global social inequality. A "breaking point" has been reached, according to the initiators. "The costs to our economic, social and environmental stability are enormous and continue to rise every day. In short: we must act now!”

Their demands, as they say, are not radical. They are more "back to normal". "Extreme and unproductive wealth" could be transformed into "an investment in our democratic future," they say.

The signatories of the campaign include, for example, Valerie Rockefeller, Abigail Disney, and Austrian Marlene Engelhorn, whose family once founded the German chemical company BASF. They inherited most of their multi-million dollar fortune without having to do anything for it. And they think it's wrong.

#Marlene_Engelhorn pic.twitter.com/YfDAXj0P2G

— Marlene Engelhorn (@MarleneEnglhorn) November 3, 2022

Marlene Engelhorn, who criticizes the fact that there is no inheritance tax in Austria, recently made headlines because she wants 25 million euros from her inheritance to be "redistributed" to society. On her initiative, she is currently in the process of forming a "Citizens' Council" that will decide how that money will be used "in the interest of society".

The rich keep getting richer

The gap between the rich and the poor is indeed widening around the world. According to the 2022 World Inequality Report, more than a third of all private wealth accumulated since the mid-1990s has gone to those who already belong to the richest part of humanity.

In contrast, half of the world's population, i.e. the four billion poorest people, own only two percent of the wealth. In 2020, after the outbreak of the covid pandemic, the share of billionaires in the distribution of global wealth has increased more than ever before.

So far, there have already been several attempts to tax their extremely large assets more. During the 2019 U.S. presidential campaign, U.S. Senator Elizabeth Warren proposed imposing an estate tax on those with more than $50 million in assets.

Big obstacles to higher taxes

However, this is not easy to implement. "The signatories of the petition in Davos are primarily heirs, and those who do not actively run their companies. Because of this, they feel uneasy, because of the great wealth that they did not acquire by themselves. These are more individual votes," explains Stefan Bach, a tax expert at the German Institute for Economic Research (DIW) in Berlin.

The vast majority of the super-rich are restrained. Moreover, there is great resistance from company associations, and they are well connected to the highest political circles through lobbyists. In Germany, it is primarily the Association of Family Businesses.

"Most of those very large assets are tied up in companies," says Bach. Higher taxes, the associations believe, could threaten investments and thus jobs, or even lead to the successor not continuing the business of the family business. "It pretty much stifles political debate about wealth or inheritance taxes," Bach says.

State initiatives have no chance?

In general, it is difficult to take independent action at the state level when it comes to taxing extremely large wealth. "Those larger, internationally positioned companies, or the super-rich - play, so to speak, on the keyboard of international tax law," Bach points out.

Billionaires can relatively easily move their residence to tax-friendly countries. "And if in the end only a medium-sized German company that remained loyal to the country is squeezed out and has to be exposed to such taxes - then we won't get anything from that," Bach points out.

He adds that it is possible to generate additional money for the state coffers through a kind of combination of tax increases, but without causing major economic damage. "It is best to do it in an internationally coordinated way," says the German tax expert.

In 2021, for example, initial successes in combating tax evasion by large corporations were recorded. More than 130 countries, which account for 90 percent of global economic output, have agreed on a minimum tax rate of 15 percent for companies.

In this way, they wanted to prevent large international corporations from simply migrating to countries with better tax rates. Last year, several members of the European Parliament took a similar step, advocating for the introduction of a global minimum tax on extremely high private wealth.

Stefan Bach, however, does not believe that this will happen in the near future - which, as he explains, may also be due to the general shift to the right in Europe. "There is practically no left-wing majority anymore," says Bach.

When it comes to tax policy measures, conservative or liberal parties must always be initiated, that is, those that by their nature are in fact favorable to entrepreneurs, says Bach. He is therefore convinced that in Germany "nothing will change in the foreseeable future, and on the international level it is even more difficult to agree on something like that".