Taxes on Billionaires

Bharat Dogra

In recent times there have been several well-intentioned studies and reports that  strongly advocate raising more resources by imposing much higher taxes on the super-rich and billionaires. Increasing support for this was provided by the sharply escalating inequality of COVID times in which billionaires increased as never before and amassed wealth to an unprecedented extent, at the same time as more and more people were experiencing poverty, unemployment and denial of basic needs.

Sometimes this demand for higher taxes on billionaires takes the form of raising very significant sums of money that can help to create a fund dedicated to very important needs of crucial support for the poorest people or for high-priority environment protection programmes. This appears very attractive but can easily also have some negative consequences.

Many, perhaps most people committed to poverty reduction and environmental protection will surely like to celebrate this, particularly as there is a chance that as the wealth of the world’s billionaires increases over the years, the funds available for the new special fund will also increase.

But the new situation that has been created also means that those committed to helping the poor and to environmental protection have suddenly become the supporters of the billionaires, whether they admit this openly or not. In order to ensure that the big funds keep pouring in regularly into the new fund, if possible in increasing amounts, they now pray for the success of the billionaires and perhaps for their increasing numbers and increasing prosperity, because the more the wealth of the billionaires, the more the tax collected from them adds to the new fund. Hence those who were earlier the firm critics and opponents of the highly unequal and unjust systems that result in the concentration of so much wealth in the hands of a few billionaires, now become the supporters of the system in which the wealth in the hands of the billionaires continues to increase so that the fund favoured by them also continues to grow.

This criticism or caution would apply even if the new fund is administered in a just way. However, in reality what is more likely is that the billionaires who contribute to this and the existing international financial institutions with all their pro-rich, pro-inequality, status quo bias are likely to dominate the functioning of such a fund with some co-opted ‘civil society’ representatives having a symbolic presence.

What one would really like to avoid is a situation in which many people start saying— Oh it is the billionaires who provide most of the increased resources for helping the poor and for other essential priorities like environment protection, in the form of taxes, so let them grow faster and faster so that more and more taxes can be obtained from them. If this happens then in an awkward twist, some persons and organisations who see and position themselves as champions of equality may find themselves in a role of promoting even deeper levels of inequality and an inherently unequal pattern of development just to get some shorter-term gains.

A realisation of this possibility of falling into the trap of willy-nilly justifying the deeper inequality-enhancing processes can alert genuine advocates of social and economic equality to avoid placing all their eggs in the basket of a fund based on taxing the billionaires. Instead, the additional tax imposed on billionaires can go to a general pool of budgetary resources, on the understanding that the enhanced budgetary resources will be utilised in much more bountiful ways to help the poor and protect the environment.

Back to Home Page

Frontier
Vol 57, No. 11, Sep 8 - 14, 2024