OPINION: Billionaire tax leaks: The system needs a radical overhaul

by Djaffar Shalchi | Millionaires for Humanity
Thursday, 10 June 2021 10:22 GMT

ARCHIVE PHOTO: A homeless man sleeps in a closed Chase bank branch on a nearly deserted Wall Street in the financial district in lower Manhattan during the outbreak of the coronavirus disease (COVID-19) in New York City, New York, U.S., April 3, 2020. REUTERS/Mike Segar

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The news that the 25 richest Americans paid an effective tax rate of just 3.4% was shocking to many. But no one who is rich was surprised

By Djaffar Shalchi, an entrepreneur from Denmark and founder of Millionaires for Humanity, a network of wealthy people who advocate for raising taxes on wealthy people.

The news that the 25 richest Americans paid an effective tax rate of just 3.4%, exposed by investigative journalists at ProPublica, was summed up by New York Times as “shocking”.

But here’s the real shock: no one who is rich was surprised by the story. All multi-millionaires knew that’s how the system works, because all multi-millionaires profit from it. I know, because I’m one of them.

Some of the recent revelations have exposed literal crimes. Those people should be jailed. But the most immoral aspect of the story is this: most of the system which enables such low tax payments by the rich are completely legal. And the most significant factors are not in the “loopholes”, they’re in the design.

It didn’t always used to be like this. While defenders of hyper-inequality like to pretend it’s some natural state, humanity did manage, for several decades from the end of World War II to reduce inequality in countries across the world, by levying relatively high taxes on the rich and redistributing that to pay for public services. I’m not referring to Marxism, but to what was the mainstream, Western, mixed-market approach. It had bipartisan support: centre-right as well as centre-left governments pursued it.

Rather than holding back entrepreneurialism and social mobility, this approach enabled them. How did I, an immigrant kid of a single mother working as a cleaner in hotels, end up as an engineer and real estate entrepreneur? Because of the Scandinavian welfare state, paid for by taxes on the rich. (Thank you, Scandinavia.)

Then came neoliberalism, less “trickle-down” than vacuum-up. Because of the profound shift made in past decades in fiscal and social policies, it is much harder now for a poor boy like I was to become a rich man like I am now.

And even worse than the building up of this inequality-exacerbating system in the rich world, is that we imposed on the developing world too. We told Africa to shrink the state and close its public hospitals and schools.

And now, in the global COVID-19 economic crisis, people across the world are experiencing how much more painful it is to fall a hundred feet if the safety net has been slashed.

The UN has shown that we need trillions, not millions, or billions, to rebuild the global economy, tackle rising hunger and deprivation, and ensure health for all, as set out in the internationally agreed Sustainable Development Goals. This cannot come from philanthropy, as the numbers literally don’t add up. But it can come from taxes.

Of course, these taxes need to be fair, and need be able to raise the amounts needed. Luckily, a readily available solution exists: wealth taxes. Such taxes would only be imposed on people who own multiple millions of dollars. The super-rich would be taxed on their wealth, which is huge, not only on their income, which is much lower and which they can find ways to keep down.

Wealth taxes are hugely popular the world over, with voters of all political persuasions, as polling has shown. But many politicians are still too scared to introduce them.

Some fear that wealth taxes would drive the rich away. That’s why I and a group of fellow multimillionaires from across the world came together in Millionaires for Humanity – where we, those who would be the ones to pay the wealth tax, advocate publicly in favour of it and work to dispel the scare stories told about it.

Not all rich people agree with us, and perhaps not even most, of course. But our group keeps growing and growing. Not because we are saints – we are not! But because we know that we can either have a world where we super-rich are hardly taxed at all, where infrastructure falls apart, hunger rises, and trust collapses. Or we can have a world that works, where folks like us have to pay our fair share. Even for us, that’s a bargain.

Yes, it’s gotten so extreme that even some of us Richie Rich folks want governments to tax multi-millionaires’ wealth. Maybe that is the biggest shock of all.