“We are surprised that you still have not been able to answer a simple question that we have been asking for years: Why don’t you tax extreme wealth?” are meeting these days in the Swiss resort of Davos, the participants of the “Proud to pay more” campaign. The letter was delivered on Wednesday to the World Economic Forum.

It is not the first time that some activists have called for the “haves and haves” to pay more taxes. The special thing this time is that everyone who signs the letter is also rich. These are 260 millionaires or even billionaires, who belong to the richest people in the world, but complain about the continuous widening of inequalities in the distribution of income. Their demand for more taxes is not at all “radical”, they point out, but instead “signals a return to normalcy”. In this way extreme and unproductive wealth is “turned into an investment for a common, democratic future”.

The rich get richer

The signatories include Valerie Rockefeller, Abigail Disney, and Austrian Marlene Engelhorn, “golden heiress” of the business dynasty that founded the German multinational giant BASF. The common denominator for all of them is that they have a huge fortune, without having worked for it themselves. Engelhorn recently caused a sensation worldwide, saying that she intends to “give back” 25 million euros of the fortune she has acquired to society. For this reason, he is going to set up a “Citizens’ Council for Redistribution”, which will decide how this money will be allocated “in terms of public interest”.

The truth is that the gap between rich and poor is constantly widening. According to data from the World Inequality Report for 2022, a third of the new wealth created from the mid-1990s to today is directed to those who already belong in the 1% of the richest people in the world. At the same time the poorest half of the world’s population, i.e. about four billion people, secure only 2% of the new wealth. In fact, in 2020, the year the coronavirus pandemic broke out, the share of billionaires in global wealth was greater than ever.

Many attempts have been made from time to time to increase the tax burden on the rich. In the 2019 US election campaign, for example, Senator Elizabeth Warren, who was running for the Democratic nomination, had proposed imposing an additional tax on estates over $50 million. However, implementing the request is proving to be very difficult.

Most of the rich are “hiding”

Stefan Bach, a researcher at the German Institute for Economic Research (DIW) specializing in tax matters, believes that the implementation of the “Proud to pay more” initiative will not be easy either. “The signatories to the open letter in Davos,” he says, “are mostly heirs who are not actively involved in business and therefore feel uncomfortable having inherited wealth they did not work for. But it’s more likely to be menon voices.”

Most of the rich stay discreetly in the background. At the same time, the highly networked business lobbies put up strong resistance to any initiative to raise taxes. “Most large assets are tied up to service business obligations,” recalls Stefan Bach. Business lobbies warn that the increase in taxation could jeopardize future investment and jobs, so, the German analyst points out, “any political debate on the imposition of a wealth tax or an inheritance tax is suffocated in its infancy”.

The national initiatives are fruitless

After all, any attempt by a single country to impose high taxes on higher incomes would probably be doomed to failure. “Both business giants and wealthy individuals play with the fingers of international tax law, they can, for example, very easily transfer their headquarters to another country with much lower tax rates,” emphasizes Stefan Bach.

On the other hand, points out the analyst of the DIW Institute, with the right mix of tax policy one could easily increase public revenues, without serious side effects for the economy, “but only on the condition that a relevant agreement can be reached at the global level ». In 2021, a first serious effort was made to combat corporate tax avoidance, when 130 countries from around the world, which together represent 90% of the global economy, agreed to a minimum corporate tax of 15%.

In 2023, some MEPs took a similar initiative, aiming for a global agreement to impose a minimum tax on private wealth. However, Stefan Bach believes that this initiative has no serious chances of implementation. This is also due to the general political shift to the right, which is observed internationally. “Within Germany, probably nothing is going to happen in the foreseeable future,” Bach points out. “Outside Germany, it will be even more difficult…”