Nobel Prize winner Stiglitz wants 70% tax on top incomes

Nobel Prize winner Stiglitz wants 70% tax on top incomes
Joseph Stiglitz: World Economic Forum Davos 2009 (Photo: Wikipedia, CC BY-SA 2.0)
in Distribution Justice
by Kathrin Glösel
[This article posted on January 24, 2023 is translated from the German on the Internet, https://kontrast.at/joseph-stiglitz-ungleichheit/.]

Nobel Prize winner Joseph Stiglitz is concerned about growing social inequality around the world. The gap between rich and poor is widening. To reverse this trend, he is calling for the super-rich to pay higher income tax and a wealth tax. He says that introducing a global special tax rate of 70 percent for top earners “would clearly make sense.”

“People at the top might work a little less if they are taxed more heavily. But on the other hand, our society benefits from a more egalitarian society with greater cohesion,” the former chief economist of the World Bank explained in the Oxfam podcast “Equals,” which the British newspaper The Guardian has summarized.

Current top tax rates are much lower than what Stiglitz has in mind. A few examples: The top tax rate in the UK is 45 percent on annual incomes above £150,000. In the US, the top tax rate is 37 percent on incomes above $539,901. In Austria, it is 55 percent, but only for annual incomes above one million euros. In Germany, the top tax rate of 45 percent applies to annual incomes above approximately 278,000 euros.

Joseph Stiglitz: Becoming rich is a matter of chance – not achievement
Stiglitz explained in the podcast that such a new, higher top tax rate would lead to greater redistribution – but that wealth must also be taxed fairly. This would ensure that the world's richest people, whose wealth has been accumulated over generations, make a fair contribution.

According to Stiglitz, a global wealth tax would have an even greater impact on combating social inequality.

“We should tax wealth more heavily, because a large part of wealth is inherited. For example, the young Walmarts inherited their wealth,” Stiglitz cited as an example.
"One of my friends describes it as winning the sperm lottery. You got the ‘right’ parents. I think we need to be clear that most billionaires have only acquired their wealth through luck.“

The Nobel Prize winner considers US Senator Elizabeth Warren's proposals for a 2 percent tax on wealth over $50 million and a 3 percent tax on wealth over $1 billion to be ”very reasonable." He believes that this “would really help generate revenue that could be used to alleviate some of the problems facing our country.”

Crisis has made the rich even richer
According to Stiglitz, the coronavirus pandemic has exacerbated social inequality around the world to an ‘astonishing’ extent and “both exposed and exacerbated global inequalities.”
“At a time when so many people's lives have been so difficult, when they have lost their jobs, when food prices and oil prices have risen, it is shocking how many people and rich companies have made off like bandits,” Stiglitz criticizes.

Oxfam study: For the first time in 25 years, extreme wealth and extreme poverty are growing simultaneously
A recent Oxfam study has shown that almost two-thirds of the wealth accumulated since the start of the pandemic has gone to the richest 1 percent. The charity found that the wealthiest individuals will have accumulated $26 trillion in new assets by the end of 2021. That is 63 percent of all new wealth, with the rest going to the remaining 99 percent of people.

The result: For the first time in 25 years, the rise in extreme wealth is accompanied by an increase in extreme poverty.
The charity said that a tax of up to 5 percent on the world's multimillionaires and billionaires could raise $1.7 trillion annually. That, in turn, would be enough to lift 2 billion people out of poverty and end world hunger.

“While millions of people don't know how to pay for food and energy, the crises of our time are bringing huge wealth gains for billionaires,” said Oxfam spokesperson Manuel Schmitt.

200 super-rich call for global wealth taxes
In the run-up to the World Economic Forum in Davos, more than 200 members of the super-rich elite sent a letter to governments around the world calling on them to “tax us, the super-rich, now” in order to combat the crisis of inequality. The campaign was organized by the organizations “Patriotic Millionaires,” “Tax me Now,” and “Millionaires for Humanity.”
Signatories include Disney heirs Abigail and Tim Disney and “Hulk” actor Mark Ruffalo. Marlene Engelhorn from Austria also took part in the protest, delivering the letter on site.