"We are surprised that you cannot answer a simple question we have been asking you for three years: When will you tax excessive wealth?"
This is the question of the participants of the online campaign "Proud to pay more", which was launched on the sidelines of the World Economic Forum in Davos. During the forum, activists delivered an open letter to the organizers demanding higher taxes for the super-rich around the world.
Participants in the campaign are actually among the world's richest people. 260 billionaires and millionaires from different countries are joining forces to protest the fact that global social inequality continues to grow. Emphasizing that their demands are not radical but "a return to normalcy", the "rich" activists argue that "excessive and unproductive wealth can thus be turned into an investment in our democratic future".
Signatories include Valerie Rockefeller, Abigail Disney and Austrian Marlene Engelhorn, heiress of the family that founded the German chemical company BASF. All of them inherited most of their multimillion-dollar fortunes without working for them. And they think this is unfair.
Engelhorn, who criticizes the lack of inheritance tax in Austria, has come to the fore with her initiative to "redistribute" 25 million euros of her fortune to society. A "citizens' council" is being set up to decide how to use this money "for the common good". Engelhorn has announced that he will not interfere in any way in the decisions of this council.
The rich get richer
The gap between rich and poor is widening worldwide. According to the 2022 World Inequality Report, more than a third of all private wealth accumulated since the mid-1990s has already gone to the richest one percent of humanity. In contrast, half of the world's population, the poorest four billion people, have received only two percent of this money. After 2020, the share of global wealth held by billionaires has increased even further.
Internationally, there have been previous attempts to tax large fortunes more. A recent example was US Senator Elizabeth Warren's proposal during the 2019 presidential election campaign to introduce a wealth tax on assets worth $50 million or more.
High hurdles for high taxes
But these proposals are not so easy to implement. "The signatories of the open letter in Davos are mostly heirs who are not actively involved in business and are uncomfortable with large fortunes they did not earn," says Stefan Bach, a tax expert at the German Institute for Economic Research (DIW) in Berlin. Their campaign is therefore no more than an isolated outburst," says Stefan Bach.
The vast majority of the super-rich remain silent in the face of such campaigns. Even many entrepreneurs, who often have high-level political connections through their lobbying activities, resist such plans.
"Most of the great fortunes are part of company investments," says Bach:
"Low taxes for entrepreneurs should encourage them to invest and create jobs. Higher taxes could jeopardize these investments and jobs."
No chance for national initiatives?
"Large global corporations and the super-rich play an active role in shaping international tax law. Billionaires gain great advantages by moving their production facilities and residences to foreign countries with relatively low tax rates. As a result, the tax burden falls on the heroic small and medium-sized businesses operating in Germany. There are no gains to be made."
Some successful steps were taken in 2021 to curb tax evasion by large corporations. More than 130 countries, accounting for 90 percent of global economic output, agreed on a minimum tax rate of 15 percent for corporations. This is intended to prevent large international companies from moving to countries with lower tax rates. Last year, some European parliamentarians made a similar proposal for a global minimum tax on high private wealth.
However, Stefan Bach does not see this happening in the near future. One of the main reasons for this, he believes, is the inevitable rise of right-wing parties in Europe:
"Left-wing parties are no longer in power in almost any country. When it comes to tax policy, you have to get the support of conservative or liberal parties. But these parties tend to be business-friendly by nature. There will be no change in tax policy in Germany for the foreseeable future. Coordinating such regulations internationally is much more difficult."
