World and India Billionaire and Millionaire Wealth Tax: Revenue Estimates

Courtesy: Fight Inequality Alliance and others

Using new data from Forbes and Wealth X, Patriotic Millionaires, Institute for Policy Studies, Fight

Inequality Alliance and Oxfam have prepared estimates for what wealth taxes on the world’s richest

people could raise.

Wealth and Revenue Estimates

• Globally, there are 3.6 million individuals with over $5 million or more in wealth. Their total wealth is equal to $75.3 trillion.
• There are 183,000 individuals with $50 million or more with a combined wealth of $36.4 trillion.
• There are 2,660 global billionaires with a total combined wealth of $13.76 trillion as of November 30, 2021.

An annual wealth tax (a 2%, 3%, and 5% structure) applied to this wealth would raise $2.52 trillion a year. A more steeply progressive wealth tax (a 2%, 5%, and 10% structure) would raise $3.62 trillion a year.

What Could This Revenue Pay for?

According to the World Bank there are currently 3.297 billion people living on the poverty line of less than $5.50 a day. It would cost on average $901 per person annually to lift up someone living below the $5.50 line; the total cost of doing this for all of the 3.297 billion people living on less than $5.50 a day would be $2.97 trillion dollars.

An annual wealth tax on the world’s millionaires and billionaires could also generate enough revenue to pay to make enough vaccines for the entire world and fill financing gaps in climate measures, universal health and social protection, and efforts to combat gender-based violence in over 80 countries.

COVID-19 vaccinations would cost $27.8 billion. Experts from Imperial College London, working with Public Citizen, estimate the manufacturing costs of Pfizer’s vaccine stands at just under $1.18 per shot. There are 7,874,966,000 people on Earth, according to the UN’s 2021 medium variant population estimates. The cost to vaccinate each person in the entire world would include two shots plus a booster.

Universal social protection and healthcare would cost an estimated $440.8 billion. In 2020, the finance gap for achieving universal social protection coverage and healthcare for low- and lower- middle-income countries was $440.8 billion.

Total revenue from tax: $3,620 billion

Cost of measures:

Health and Social Protection	$440.8 bn
Making Vaccines for the World	$27.8 bn
Lifting 3.3 billion out of poverty	$2970 bn
Total revenue from wealth tax	$3620 bn

What Proportion of the World’s Wealth Is Held by Millionaires and Billionaires?

World Inequality Lab: €510 trillion as of 2021.

• Individuals with $5M+ account for 13.07% of all global wealth despite only being 0.05% of the world’s population in 2021.
• Individuals with $50M+ account for 6.33% of all global wealth despite only being 0.002% of the world’s population in 2021.

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India Factsheet

1. The Super-Rich and the Pandemic

There are 66,860 individuals with a net worth $5 million or more, with wealth totaling $1.685 trillion.

There are 4,060 individuals with $50 million or more with a combined wealth of $949.5 billion.

Between 2016 and 2021, the number of individuals with wealth over $50 million increased from 2,420 to 4,060. Their combined wealth increased from $601 billion to $949.5 billion, an increase of 57.97%, adjusted for inflation.

There are 142 billionaires with total wealth of $719 billion as of November 30th 2021. Throughout the pandemic (beginning in mid-March 2020), the wealth of Indian billionaire class has increased from $334.97 billion to $719 billion.

2. The Rich Compared to Everyone Else

The wealth of Indian billionaires has more than doubled during the Covid-19 pandemic while 46 million people are estimated to have fallen into extreme poverty in 2020 (nearly half of the new global poor).

The richest 98 billionaires own the same wealth as the bottom 40% of Indian society.

3. Annual Wealth Tax

An annual wealth tax in India would raise $78.3 billion a year (with rates at 2% on wealth over $5

million, 3% on wealth over $50 million and 5% on wealth over $1 billion).

A more progressive wealth tax would raise $122 billion (with rates at 2% on wealth over $5 million,

5% on wealth over $50 million and 10% on wealth over $1 billion).

4. Health Not Wealth: Impact of Revenue on Health Spending

An annual wealth tax applied to the wealth of multi-millionaires and billionaires would raise $78.3

billion a year, enough to increase government health budget by 271%, or eliminate households out of pocket health budget and leave some $30.5 billion.

(Courtesy: “Taxing Extreme Wealth, Factsheet Report”, by Patriotic Millionaires, Institute for Policy Studies, Fight Inequality Alliance and Oxfam.)

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‘With Exploding Inequality, India Can’t Continue With Business As Usual’

Govindraj Ethiraj

[The recent Oxfam India Inequality Kills report, 2022 has some staggering data on wealth inequality. The wealth of the 10 richest billionaires in India would be enough to fund the schooling and higher education of India’s children for more than 25 years.

A 1% tax on the wealth of the top 98 Indian billionaires can fund the total annual expenditure of the Department of School Education and Literacy under the Ministry of Education.

At $719 billion [Rs 53 lakh crore], India’s 142 billionaires are now worth more than the poorest 555 million Indians – more than half a billion people. India’s billionaires have seen their combined fortunes more than double during the pandemic and the number of Indian billionaires shot up by almost 40% since 2020.

More such data figure in Oxfam’s annual report on inequality, whose release was timed as the virtual World Economic Forum meeting is underway in Davos. To understand the data underlying this report, we spoke to Amitabh Behar, Chief Executive Officer of Oxfam India.]

Edited excerpts from the interview:

Govindraj Ethiraj: Tell us what’s changed in the last two years and why inequality is more significant than ever before.

Amitabh Behar: The trend [of increasing inequality] has been visible for a while, but is now completely exploding. Just look at the top 10 richest people globally: their wealth has doubled during the Covid-19 pandemic, while 99% of the global population has seen a decline in their wealth and income. That’s the hard reality, that [inequality] is exploding. Look at the India numbers. India had 102 billionaires last year, and now it’s 142. On the other hand, the most conservative estimates say that at least 4.6 crore people [46 million] have slid into poverty in India, while there are some studies that are saying that this goes up to 150 to 160 million people. The United Nations says that half of the new poor globally are coming from India. So what we’re looking at is inequality reaching obscene proportions.

There was a hope that, at least with the pandemic and the disruption [it brought to] regular life, India would take some measures to address this growing inequality, which has an enormous impact on people, but it’s business as usual. We’ve been hit by a massive pandemic and have seen the impact on the poorest of the poor. We saw it starting with the migrant crisis and we saw it in the second wave. But at this moment, it seems as if governments across the world, including the Government of India, feels that it’s business as usual. And inequality is growing because of the economic and social choices we make. It’s clearly a political choice that we have made. I think if you give the average person a choice, whether you want the top billionaires to become richer or you want more nurses, more hospital beds, more doctors in your hospitals, it should be quite a simple one, but we end up still choosing the first option.

GE: How much of this wealth is linked to stock markets and stock market capital appreciation?

AB: It’s the surge in wealth that is enormous, and that’s really what you need to look at. There are now several studies, like the income inequality study a couple of months ago, which are clearly showing that whether you’re looking at income or wealth, inequalities are growing and there’s a tremendous concentration of wealth happening at the absolute top. So this is really an economy of the top 1% versus the 99%.

GE: These percentages have been there even before the Covid-19 pandemic. Is it possible that governments or policymakers have not had the chance to specifically respond to the pandemic because we’re still in it?

AB: We are in it for close to two years now and we could have responded. For instance, look at last year’s health budget. There was a decline of 10% vis-a-vis the revised estimates of the previous year, so we have not taken the opportunities that were there, or should have been taken, around the [pandemic-induced] health crisis. There’s much more that needs to be done. There are countries across the world that have started responding. Argentina introduced a one-time wealth tax which has given them $2.4 billion (about Rs 18,000 crore) to respond to Covid-19.

GE: If we were to look at health specifically, assuming India put a 1% additional tax on the wealthy, how would that transfer happen in a way that is meaningful and achieve the objectives that you are outlining? Because transferring the funds also results in a transmission loss. Also, governments are wont to spend in many other areas if they get hold of more money.

AB: Sure, but that’s a political choice that the government needs to make. We are clearly seeing that the health infrastructure in this country has been starved of resources for the last several decades. This is not just about the last four or five years. Investment in public health has hovered around 1.25% [of Gross Domestic Product/GDP]. At best, it went up to 1.5%, with successive governments. I would remind us that even five year plans topped off at at least 2% to 3% of [GDP] investment. So it’s very critical that we start looking at greater resource mobilisation – the point that you’re talking of – by introducing a wealth tax, because we do need redistribution.

On the other hand, we must also ensure that this money gets invested in the right sectors, particularly education, health and social security, which have been drivers of an equal society. To the larger questions of governance, yes, there will be leakages, but we need to start by at least acknowledging that we have poor health infrastructure that’s starved of resources. We do need a very intentional, very conscious investment of our energies and political prioritisation of health.

GE: Could the wealthy, or billionaires in this context, distribute some of their wealth themselves and would there be a way to measure that?

AB: I would say that one of the critical reasons for a more unequal society is that the super-rich are not paying their fair share of taxes. That’s important. Last year, I was looking at the global tax network study, which says that almost $450 billion are evaded from taxes. So that’s the level of evasion of taxes you see. We have seen in the Pandora Papers, how the Indian super-rich have tried to avoid taxation. So first we need to ensure that the super-rich pay their fair share of taxes. Then yes, one could look at philanthropy that they could do. But the fair share of taxes must be paid. [After all] it is the government, the public health system which can respond to the enormous [pandemic] crisis that we are facing.

GE: Let’s say wealth tax was not on the table, and admittedly it is a tough proposition not just in India but all over the world, what are the other methods that the government can try to reduce the inequality that you’ve highlighted?

AB: There are multiple methods of doing it. Wealth tax is just one of the first steps. We think that politically also, the time for a wealth tax has come. If you just look at what’s happening globally, the social unrest that we’ve seen across several countries in the last couple of years, a lot of it is related to inequality. It’s important for us as a society, to wake up to the discontent with inequality and start addressing it. Even within our existing resources, it is a question of re-prioritisation. How corporate tax was reduced in the last year, we could relook at bringing it back. There can be several other measures. It is also about reprioritising.

GE: Direct tax contributions have been going down, particularly from corporate tax, while indirect tax which hits everyone has been going up, as your report has pointed out.

AB: That’s another issue, that the indirect taxes are going up, which again, hits the poor. So in essence, what we’re looking at is reimagining the entire economic system, and certainly, taxation would be critical. Ultimately, if the objective of society is to create a more equal society, we have to take measures. We cannot continue with business as usual while we’re seeing this explosion of inequality. So these may be hard political choices, they might appear to be hard political choices, but I do think that these are absolutely critical for the well-being of society. For ultimately, the constitutional vision of an equal society is completely eluding us if we are not even taking those measures. To emphasise my point of taking the 1.25% of GDP investment in health to 3%, let me still say that we were still much lower than even several of our South Asian or BRICS peers. So it’s not that we are making a huge jump ahead of many others.

GE: Let’s focus on gender for a moment, with another data point from the Oxfam report. Women accounted for 28% of all job losses and lost two-thirds of their income during the pandemic. This had a direct impact on their access, for example, to sanitary products, per the Oxfam report. How do we address this immediate challenge of gender disparity which has been exacerbated by the pandemic?

AB: There are enough studies, which are telling us how women are getting pushed out of the workforce, certainly from the formal sector. Two years ago, our report categorically focused on the care economy. That’s something India must focus on. If I remember correctly, women do 12.5 billion hours of unpaid care work, every day. That’s the staggering figure that we had found two years ago. This is one of the first things that the government needs to recognise, the unpaid care work of women. It needs to invest much more sincerely and seriously in the care economy. Uruguay now has a law for the care economy.

Then, we certainly need to look at gender parity in terms of wages. We are seeing that gap. Another data that we have is that, just because of the hit from Covid-19, the gender parity that we could have reached in 99 years, has now [been] pushed to 135 years. Again, there are very concrete measures of investing in the care economy, from anganwadis to patient care, that need to be looked at.

GE: For the way forward, we’ve touched upon taxation and revenue, but one important point is recognising that inequality is real and measuring it. Tell us how you would measure it. How could we go about it in a way that is feasible and also ensures that we can see quick results?

AB: We are talking about recognising and measuring [inequality], which has not been done so far. But post the Sustainable Development Goals, particularly with Goal number 10 [Reduce inequality within and among countries], Niti Aayog has made a beginning in terms of trying to look at inequality, but it’s still fairly inadequate.

We certainly need to start looking at income inequality. We are suggesting at least two rounds of surveys across the decade to be able to measure both income and wealth inequality. That would go a long way in helping us understand how inequality is growing, and then we can start looking at specific policies to address it. As they say, if you don’t measure it, you don’t work on it. But the good news, with Niti Aayog starting to do it, is that it is coming into the conversation.

GE: The Oxfam report also talks about statutory social security provisions for informal sector workers. There are some interventions, such as the massive Ayushman Bharat insurance scheme that in some ways addresses the health part of an informal worker’s challenges. What else should we be doing?

AB: We have data to say that just 1% wealth tax on the 98 richest families can actually fund seven years of Ayushman Bharat in India. And let me just remind you that this is probably the most ambitious health insurance scheme in the world. So that’s the level of inequality we’re looking at.

Coming back to social security for the unorganised sector, again, I think it’s critical that we recognise the unorganised sector, start looking at providing social security, which starts with basic infrastructure from creches to anganwadis, to daycare centres to old age homes, on the one hand. On the other hand, I think it’s also very critical to start looking at the formalisation of their contracts, ensuring pension. So it’s a whole range of actions that would be needed.

GE: A lot of this is already happening, if not at the central, then at the state level. Different states are working on various aspects, whether it’s anganwadis or rules to ensure social security for construction workers.

AB: There’s probably a recognition at the level of lip service, but that certainly is not the reality. We saw what happened during the pandemic, just one-and-a-half years ago. We saw how informal sector workers had to leave those cities, which they built. The city runs because of them, but they had to leave those cities because they did not have any kind of social security. They did not have housing, and they had to leave. There are several studies that tell us that informal sector workers do not have access to either social security or security of tenure. In many places they do not get minimum wages, they certainly do not have pensions and other benefits. So it is a long haul. And that’s something that we certainly need to work on.

GE: So what does an equal society look like to you?

AB: An equal society is, I think, the dream that we’ve seen in our Constitution. And an equal society is where everybody has a fair wage, a living wage. In an equal society, every individual must be able to live life with dignity. I think that’s the most critical thing, and we’re not reaching there. And this inequality that we are creating is fueling the lack of dignity for many others. So there is a contradiction that we need to address and understand. Sometimes I feel that a lot of people still, surprisingly, talk about how you can create more wealth and let it trickle down. That has not happened. So I would say to get an equal society, let’s ensure basic human dignity for every individual.

(Govindraj Ethiraj is a television and print journalist who has reported and written on Indian business for over 25 years. Courtesy: IndiaSpend. IndiaSpend is a non-profit online webportal that uses open data to inform public understanding on a range of issues, with the aim of fostering better governance and more transparency and accountability in governance.)