Nobel prize-winning economist calls for new top rate of income tax and 2-3% wealth tax on fortunes
Sun 22 Jan 2023 https://www.theguardian.com/
Rupert Neate Wealth correspondent
Joseph Stiglitz, the Nobel prize-winning Keynesian economist, has called for the super-rich to be subjected to taxes as high as 70% to help tackle widening inequality.
Stiglitz, who won the Nobel prize in economics in 2001 and pioneered many ideas about globalisation and inequality, said introducing a special worldwide income tax rate of 70% on the highest earners “would clearly make sense”.
“People at the top might work a little bit less if you tax them more. But on the other hand, our society gains in having a more egalitarian, cohesive society,” the former World Bank chief economist, 79, told Oxfam’s Equals podcast.
Currently, the top rate of income tax in the UK is 45% on annual earnings above £150,000. In the US, the highest rate of tax is 37% on earnings above $539,901.
Stiglitz said that while an increase in the top rate on income would help lead to a more equal society, introducing wealth taxes on the fortunes accumulated by the world’s wealthiest over many generations would have an even bigger impact.
“We should be taxing wealth at a higher rate, because much of the wealth is inherited wealth, [for example] – the young Walmarts, inherited their wealth,” he said.
“One of my friends describes [this] as winning the sperm lottery – they chose the right parents. I think we have to realise that most of the billionaires have gotten much of their wealth out of luck.”
He described proposals by the US senator Elizabeth Warren for a 2% tax on people with assets of more than $50m and 3% on those with more than $1bn as “very reasonable” and said they “would really go a long way to raising revenues that could alleviate some of our country’s problems”.
Stiglitz said the Covid-19 pandemic had worsened inequality to an “astounding” degree, arguing it “both exposed global inequalities, and exacerbated them”.
“In a period where so many people found life so difficult, with losing their jobs, now dealing with food prices and oil prices going up, it is shocking how many people and rich corporations made off like bandits,” he said.
Research published by Oxfam last week showed almost two-thirds of the new wealth amassed since the start of the pandemic has gone to the richest 1%. The charity found the best-off had pocketed $26tn (£21tn) in new wealth up to the end of 2021. That represented 63% of the total new wealth, with the rest going to the remaining 99% of people.
Oxfam said for the first time in a quarter of a century the rise in extreme wealth was being accompanied by an increase in extreme poverty. The charity said a tax of up to 5% on the world’s multimillionaires and billionaires could raise $1.7tn a year, enough to lift 2 billion people out of poverty, and fund a global plan to end hunger.
More than 200 members of the super-rich elite last week called on governments around the world to “tax us, the ultra rich, now” to help address the inequality crisis.
The group of 205 millionaires and billionaires, including the Disney heiress Abigail Disney and The Hulk actor Mark Ruffalo, called on world leaders and business executives meeting in Davos for the World Economic Forum to urgently introduce wealth taxes to help tackle “extreme inequality”.