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Should we “abolish the billionaires”?

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On the sidelines of the Davos economic forum, the NGO Oxfam released its annual report. Among its conclusions, the “abolition” of billionaires, a proposal to reduce inequalities which are growing more and more. Would this solution ultimately be the right answer? Opinions differ.

Like every year, Oxfam has unveiled its annual report on the distribution of wealth. And the observation of this one is particularly eloquent. In effect, for the first time in 25 years, the NGO notices that extreme wealth and extreme poverty have increased at the same time. Also in this report, Oxfam observes that billionaires have particularly gained in recent years, specifically in times of crisis. “More than $2.7 billion a day since the start of the (health) crisis, while companies in the food and energy sectors have more than doubled their profits in 2022,” the statement read.

Even worse, according to the association: the richest 1% hold 45.6% of the world’s wealth. Conversely, the poorest half in the world must share 0.75%.

The association points in particular the failure of states to use the “trickle down” theory, the theory that by making it possible to enrich the richest, they would reinject their money into the system and therefore increase economic activity and bring more jobs. In reality, this would have only enriched the wealthiest, according to Julien Desiderio, tax justice specialist at Oxfam Belgium. “What’s holding Europe back is still the legacy of this trickle-down theory. Reality shows us today that we need a state that is strong, that is at the center of the game.

Read also | In Belgium, 1% of the population owns a quarter of the wealth, according to Oxfam

For the NGO, there are not many other solutions to reduce inequalities than to “abolish” billionaires in the long term. How ? By applying a tax on global wealth and excess corporate profits. “When you earn a low or average salary, you are very quickly taxed in the highest tax brackets. We, we think that we need a softer progression, therefore being taxed less quickly, but which goes further for high incomes. So for some very high salaries, there would have to be a tax higher than 50%. »

Deja vu?

In the past, and in different countries around the world, this solution of the tax on large fortunes has already been deployed. Recently, Spain or Argentina adopted it during the health crisis. Result : the Argentinian government would have collected more than 2 billion dollarsdirectly injected into public institutions.

In Belgium too, it has been. We have to go back to the post-war period. “In the aftermath of the Second World War, the government, to pay the ‘war debt’, adopted a wealth tax and also a tax on excess profits made due to the war”, explains Julien Desiderio.

Read also | Davos and the specter of a new cold war

An economic boom then occurred, but the trend was stopped in the 1970s in favor of the famous theory of runoff, as indicated by Arnaud Zacharie, secretary general of the CNCD. “The IMF, which was the main promoter of this theory, published studies which show that this theory does not exist and that we are rather on a vacuum cleaner effect, that is to say when the ultra-rich have a lot of wealth, they can invest in the stock and real estate markets and increase their fortune even more. »

But can we reproduce what has been done in the past? It’s complicated, but doable according to Arnaud Zacharie.

“If you are the only one to increase your taxation, the ultra-rich and the multinationals will blackmail employment and relocate to the neighbor. »

Problematic international competition

The big difficulty of this taxation on the ultra-rich is due in particular to the fact that businesses owned by the wealthiest are globally mobile. They can move from one country to another, choosing what is most profitable for them. For the secretary general of the CNCD, this is no longer possible and this tax must be done globally for it to work. “If you are the only one to increase your taxation, the ultra-rich and the multinationals will blackmail jobs and relocate to the neighbor. This is how we arrived, on corporate tax, from more than 40 to less than 20% in Europe in thirty years. At the current rate, we will reach zero around 2050. What is needed is international tax cooperation. »

Read also | Demonstration for climate tax and debt cancellation in Davos

The OECD, the Organization for Economic Cooperation and Development, had also proposed a model in December 2021 to counter this entrepreneurial mobility. The “Pillar Two rules model” would involve the implementation of a minimum tax of 15% worldwide.

Oxfam would therefore like to go even further in this imposition. But if the idea launched by the association even attracts some of the wealthiest (more than 200 millionaires very recently asked to be taxed more by world leaders, editor’s note), the nuance would be appropriate according to certain economists.

“We need to be more nuanced”

For the economist and member of the Royal Academy of Belgium Bruno Colmant, “Oxfam’s solutions are good from a conceptual point of view, but it does not adapt to Belgium. Our country is generally very egalitarian and we are not concerned with the excesses of the American market economy. It is important to say that this report is above all global in scope. »

If, like Oxfam and Arnaud Zacharie, he notes a generalized awareness in favor of tax justice, the idea of ​​“abolishing billionaires” is not, according to him, something feasible. , nor fair. The reason ? These are large-scale job creators. ” Most of the new billionaires got rich from their inventions. They have increased innovation and created employment. A billionaire brings things because in general, they are business creators.»

Too hasty a conclusion was made by the NGO, according to the economist, who would advocate him on a case-by-case basis, depending on whether the richest earned their money through their business or via a stock market investment. “Someone who becomes rich with his invention, who brings new things to humanity and employment, I think that’s very good. It is very different from purely speculative capital», nuance Bruno Colmant.

Read also | Energy crisis and inflation: the sensitive topics of the Davos Economic Forum

Agree or not with Oxfam’s proposal, its report comes at the right time since the Davos Economic Forum ended on January 20th. Enough to fuel discussions to find a solution, or not, to the growing wealth gaps in the world.

The post Should we “abolish the billionaires”? appeared first on Le Vif.

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