An annual net wealth tax could inject half a trillion dollars into the economy.
In advance of Tax Day, Oxfam called for a US wealth tax to reduce extreme wealth inequality, advance racial justice, tackle the climate crisis, and protect democracy. Oxfam also highlighted how fairer taxation of the ultrawealthy could have prevented the current debt-ceiling gridlock.
In a new analysis released today titled “Tax Wealth, Tackle Inequality,” Oxfam underlined that extreme wealth concentration is at a record high in the US. New Oxfam calculations based on Forbes data show that US billionaires are almost a third richer than they were at the onset of the pandemic in 2020, even accounting for the turbulent stock market in 2022. Since 2013, US billionaires have gotten 86 percent richer. Oxfam also calculated that for every $100 of wealth created from 2012-2021 in the US, $37 have gone to the richest 1 percent, with the bottom 50 percent only receiving $2.
"Tax Day is a reminder that the tax system isn’t working for ordinary Americans. It’s built to favor the richest in our society,” said Nabil Ahmed, Oxfam America’s Director of Economic Justice. “The ultrawealthy are sitting on mountains of wealth that remain largely untouched by taxes, and their wild riches are in no small part a result of intentional public policy. We need to implement strategic wealth taxes if we want to stand any chance at reining in this kind of Gilded-Era wealth inequality that allows the super-rich to have a stranglehold over our economy.”
Not only is wealth inequality more extreme than income inequality, but wealth is also highly stratified by race. Oxfam makes the case that wealth taxation can narrow the racial wealth gap, which has hardly moved since 1950. Today, the average Black American household holds only about 12 cents in wealth for every dollar of the average white American household. The same trend applies to stock ownership: 89 percent of shares are owned by white families, compared with just 1 percent owned by Black families.
Wealth taxation also plays a vital role in responding to the climate crisis. Climate breakdown is disproportionately driven by the investments and emissions of the wealthiest people, and their choices to invest in polluting industries affect how all Americans use energy. Oxfam’s analysis of 125 of the richest billionaires shows that on average their individual investments result in a million times more emissions than one average person.
“Taxing the ultrawealthy is essential to tackle extreme wealth inequality and protect our democracy from the threat of oligarchy – but it is also central to advancing racial and climate justice, connections that we must pay more attention to,” continued Ahmed. “It’s also clear that political gridlock around the debt ceiling is a consequence of tax cuts on the richest.”
Oxfam calls on the Biden administration and Congress to enact a wealth tax in order to build a more equitable and prosperous economy, and underlines Senator Warren’s Ultra-Millionaire Tax as an “urgent and necessary proposal.” Oxfam estimates that a 3 percent tax on billionaire wealth alone, as proposed in the Warren wealth tax, would raise $114 billion annually, while taxing all wealth above the lower threshold of $50 million would raise this revenue substantially.
Oxfam, the Institute for Policy Studies, and Patriotic Millionaires calculated that an annual net wealth tax could raise over half a trillion dollars ($582.6 billion) each year by taxing the ultrawealthy at higher rates: 2 percent above $5 million, 3 percent above $50 million, and 5 percent above $1 billion. As an illustrative example, over $1 trillion could be raised through implementing a one-off windfall tax of 27 percent on each billionaire.
The billions of dollars raised from these wealth taxes could fund countless crucial inequality-busting investments for working families across the US and abroad. For example, a 3 percent wealth tax on billionaires alone could finance the $97 billion needed to reinstate the Child Tax Credit program, which cut child poverty by an astonishing 30 percent during the height of the pandemic. $80 billion would go a long way to help lower-income countries address the catastrophic impacts of the climate crisis.
“Without a wealth tax, extreme inequality will stubbornly persist and working families will continue to be held back,” said Ahmed. “Polls consistently show that raising taxes on the ultrawealthy and corporations is overwhelmingly popular with the American public, and other high-income countries offer lessons for how it can be done. These taxes would allow us to make strategic investments in our country that directly address the existential crises of our time and pave the way for a more prosperous future for everyone. Tax Day is a great time to start.”
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NOTES TO EDITORS:
Oxfam America’s new media briefing is called “Tax Wealth, Tackle Inequality: Five reasons why a wealth tax makes sense.”
Analyses on the development of billionaire wealth were calculated using data from the Forbes Billionaire List.
Racial wealth gap statistics were sourced from the National Bureau of Economic Research and the Federal Reserve Board.
Estimates of potential revenue from Senator Warren’s Ultra-Millionaire Tax were calculated based on the Forbes Real-Time Billionaires List on March 28, 2023.
Annual net wealth tax estimates were calculated by Oxfam, together with the Institute for Policy Studies and Patriotic Millionaires, using new data from Forbes and Wealth-X.
Calculations on paid leave investments are based the White House’s “Fact Sheet: The American Families Plan” from April 28, 2021.
Data on the child tax credit was sourced from the National Bureau of Economic Research.
Analysis of international climate finance commitments is based on CarbonBrief and Oxfam data.