Countries could collectively raise $2 trillion if they copied Spain’s wealth tax applied to the top 0.5 richest households. The sum is double the amount needed to cover the climate financing needs of the global majority in the developing world. 

The Tax Justice Network, the organisation behind the findings published in August, says a wealth tax would only apply ‘to the upper crust of the households’ wealth rather than all their wealth.’ 

Their recommendation copies the current wealth tax applied in Spain. According to the advocacy group’s latest study, on average each country could raise the equivalent of 7 per cent of its spending budget. 

Tax Justice Network’s study finds that previous tax reforms aimed at the wealthiest generally didn’t result in them relocating away from their home country, despite media headlines claiming the contrary.  

Just 0.01 per cent of the richest households relocated after wealth tax reforms were implemented in the Scandinavian countries of Norway, Sweden and Denmark.  

Such a huge sum of money amounting in the trillions is only possible thanks to what the advocacy groups says are ‘extreme levels of wealth collected by the very richest.’  

On average, in each country, just 3 per cent of all wealth is owned by half the population, while the richest 0.5 per cent own a quarter (25.7 per cent) of the wealth. 

The report adds that such extreme wealth among the super-rich is ‘making economies insecure and is directly linked to lower economic productivity; to non-rich households having to spend more than they bring in; and to poorer societal outcomes such as worse educational attainment and shorter lifespans.’  

The Tax Justice Network argues that the root of the problem is the ‘two-tier treatment of collected wealth and earned wealth’, with ‘virtually all their wealth comes from owning business and real estate empires.’  

The topic of taxing the world’s super-rich has come under the spotlight in recent months particularly since Austrian-German philanthropist Marlene Engelhorn’s decision to redistribute her €25 million inheritance. A citizens assembly made up of ordinary Austrian citizens will solely decide what to do with her sizeable inheritance handed down by Engelhorn’s grandmother, who’s wealth was estimated by US magazine Forbes at €3.8 billion. 

Alliance guest editors for upcoming issues: Jo Swinson (left), Marlene Engelhorn (middle) and Crystal Simeoni (right)

Engelhorn is a guest editor of Alliance magazine’s September 2024 issue covering tax and philanthropy. In our magazine, she explores and opens up conversations on the role tax incentives play in promoting philanthropy, whether they are justified at all and how donors can be encouraged both to pay their taxes and do philanthropy.  

‘Wealth and power have always protected themselves, but if we are to arrest the downward slice of our societies and environment, a major shift in wealth distribution is needed,’ writes Engelhorn in our special feature in print and soon to be published online.  

 Alliance magazine’s December 2024 issue will be guest edited by Jo Swinson and Crystal Simeoni.

Swinson has spent the last four years as director for Partners for a New Economy, an international philanthropic fund tackling roots causes of multiple crisis such as global inequality and ecological crises.  

Simeoni, director of the Nawi Afrifem Collective, primarily focuses on ‘reimagining macroeconomic policies through a Pan-African feminist lens.’  

Shafi Musaddique is the news editor at Alliance magazine.