Survival of the richest
It's time to fight inequality by taxing the very richest.
Extreme poverty in the world is on the rise for the first time in 25 years, and the vast majority of people are facing increasing economic hardship. Two thirds of all wealth generated since 2020 has gone to the richest one percent - twice as much as the remaining 99% of the world's population shared in the same period. We want to see a wealth tax on billionaires to end the inequality that is tearing our societies apart.
Open letter from millionaires and billionaires:
It was in 2014 that Oxfam first sounded the alarm at the World Economic Forum about the extreme inequality in the world. Since then, the world's dollar billionaires have almost doubled their fortunes and, astonishingly, the richest 1% have raked in almost twice as much as the rest of the world combined since 2020. Hundreds of millions of people are facing impossible price rises, and people across the world are still suffering from the pandemic that has already caused the deaths of over 20 million people.
In these crises, most people suffer, but there are also clear winners. The very richest have become dramatically richer and corporate profits are at record levels. The result is an explosion of inequality. The fact that the world's dollar billionaires and corporations are getting richer while poverty is increasing is a clear sign of a failed economic system and bad policy decisions.
Even in Sweden, inequality is rampant: the five richest Swedes own more than five million Swedes do combined, and over the last ten years 61.5% of all wealth generated in Sweden has gone to the richest 1%. None has gone to the poorest 50%.
Oxfam calls on national governments and international institutions to implement the following actions:
- Introduce a one-off tax on large fortunes and a temporary tax on extraordinary profits for companies
- Implement a permanent tax increase for the richest one percent. The tax should apply to both labour and capital income and have a higher tax rate for multi-billionaires.
- Stop widespread tax evasion and sophisticated tax planning by large companies and wealthy individuals by increasing the transparency of tax systems.
Oxfam Sweden would also like to see the Swedish government take specific action by:
- Mapping and investigating inequality in Sweden and its consequences. We want the government to carry out an analysis and, based on this, to propose solutions for reducing economic inequality in Sweden. The analysis should also include proposals on how inequality can be reduced between countries and in countries with widespread poverty.
- Provide generous international assistance. We want the government to act to reduce inequality in the world through generous Swedish aid. Aid should be one per cent of GNI, and climate funding for countries with widespread poverty and particular vulnerability should be increased.
"We live in a world that is now characterised by polarisation and inequality. The human suffering is enormous. But inequality is not a law of nature. It is a result of political action and we can and must choose to try to stop the rise of inequality."
Suzanne Standfast, Secretary General Oxfam Sweden
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To understand rising energy and food prices, we need to look beyond supply and demand. Increasing evidence points to corporate price premiums and increased profits as a significant driver of inflation. Many companies are not only setting higher prices for consumers, but they are also capitalising on the crisis, using it as a smokescreen to raise prices and thus their own profits.
Oxfam's analysis of 95 food and energy companies shows that they made a profit of $306 billion in 2022, 84% of which was paid directly to their shareholders - making the rich even richer. To address this, governments can increase their revenues to raise more funds that can be directed to efforts that reduce inequality. This could be done, for example, by introducing a one-off tax on extraordinary corporate profits and on major wealth generated in times of crisis.
The traditional explanation for rising inflation is that it occurs when demand exceeds supply, and prices thus rise. That logic only partly explains the price increases that are now taking place for food and energy, for example.
Food and energy companies have maintained high prices without the threat of being outcompeted, and when their purchase prices have fallen, the surplus has been sent to shareholders instead of consumers. This trend led to food and energy companies more than doubling their profits in 2022, paying out $257 billion to wealthy shareholders. This while 800 million people go to bed hungry every night.
One constant over the past 25 years has been the steady reduction of poverty in the world. Unfortunately, this positive trend has reversed and today extreme wealth and extreme poverty are increasing simultaneously.
Historically, extreme wealth and power of the very richest during global crises has been limited by increased taxation of the very richest. We can learn, for example, from Costa Rica, which increased taxes on the very richest by 10 percentage points, from 15% to 25%, and Bolivia and Argentina, which introduced wealth and solidarity taxes on their wealthiest citizens. These kinds of solidarity policies give a real boost to the economy and combat inequality.
In economic crises, ordinary people are the first to suffer from reduced purchasing power and redundancies. In 2020, COVID-19 caused shutdowns and an economic downturn unprecedented in history. It led to a loss of working hours almost four times greater than during the 2008 global financial crisis. Women and racialized people were hit hardest.
Oxfam's analysis shows that at least 1.7 billion workers will see inflation rise more than their wages. This reduces their purchasing power and makes it more challenging for them to feed their families or pay to heat their homes, for example. We need an immediate tax on the very richest people and companies as an effective measure to combat inflation and inequality.
Patience
Patience works as a nurse at Korle Bu University Hospital in Ghana and can barely support her family on her monthly salary. She is considering changing jobs because of the increased cost of living.
"I can't handle it. Now I can manage thanks to other people's help. I am worse off than before; my salary, transport, the situation of my family and children - I am living on grace."
Pink
Rosa lives in Spain and is the mother of two children. She uses four different apps on her mobile phone to compare food prices. Otherwise, she can't afford it.
"Now we don't live, we just survive. We pay, we eat what we can, but it's no life. I don't know when I became poor, all my life I've been convinced that I'm middle class. With the apps, I calculate how much I can spend, whether I can buy potatoes or not this month. I can no longer afford certain fruits - when did it become like this?"
About the report
Oxfam's "Survival of the Richest" report will be published on 16 January to coincide with the opening of the 2023 World Economic Forum, WEF, in Davos, Switzerland. Since 2014, Oxfam has published reports on economic inequality in conjunction with the World Economic Forum - to draw the attention of the power elite to the rampant inequality and demand that they act to address it. This year's report shows rising inequality, many people getting worse off while a small elite gets richer, and that we face major shared challenges that require political action. This year's report also focuses specifically on a key part of the solution to economic inequality: tax.
