Oxfam’s recent report about inequality couldn’t be any more timely as it coincided with January’s annual World Economic Forum in Davos.
According to Oxfam, the richest 62 people in the world have as much as the poorest 50 per cent – that’s half of all people on the whole planet – while the richest one per cent have more wealth than the remaining 99 per cent.
The shocking figures confirmed what was feared by many that the credit crunch, which was caused by reckless bankers, and its aftermath only enabled the richest to claim even more of the world’s total wealth.
Between 2010 and 2015 the wealth accrued by the poorest 50 per cent dropped by 41 per cent, while the wealthiest 62 people – topped by Bill Gates, with an estimated fortune of $79.2bn, and including Facebook founder Mark Zuckerberg, with of $45.5bn – increased their wealth from $350bn to a whopping $1.76trn.
To look at the reasons behind such vast inequalities, it’s obvious that the economic policies of different governments have allowed it to happen in more than one way, but mainly by unfair tax policies. For example, in Ireland, where the corporate tax is 12.5 per cent compared to an income tax of 20 per cent for those earning under €42,800 and 40 per cent for those earning more.
Such an unfair tax system, coupled with aggressive wage cuts, forced the poor to bear the brunt of the recession and lead to a situation where Ireland’s wealthiest 20 per cent controls nearly three-quarters of the country’s wealth, leaving just 0.2 percent for the poorest 20 per cent.
Tax havens, where companies and individuals can register for tax avoidance purposes, are another tool of income inequality. American companies registered in Ireland make profits of $970,000 per employee per year, but they only pay $25,000 tax per employee.
In the UK, while the Chancellor of the Exchequer famously repeated his catch phrase “we’re all in it together”, his policies of lowering tax for the rich – which allowed Google to pay only three per cent tax while public sector workers had to take a pay cut – allowed Britain’s 100 richest families to increase their wealth by £57bn since 2010, the year the Tories returned to power in coalition with the Liberal Democrats.
Advocates of lowering tax for the rich and corporations argue that it is important to give incentives in order to encourage job creation. Yet the USA’s tax rules under Presidents Bush and Obama actually showed the opposite effect.
Although America’s employment market hit a low after Obama’s first year in office in 2009, his administration implemented policies that included tax relief for the middle classes while the wealthiest one per cent paid just six percent higher than what they had done under George W Bush. Obama’s policies created so far more than 13 million jobs compared with his predecessor, who managed to create only 5.4 million despite presiding over a period of better economic conditions.
While democratically elected governments use different means to make the rich richer, dictatorships and absolute monarchies never have to worry about such obfuscations. For example, Prince Al-Waleed bin Talal al Saud, who is the world’s 34th richest person with a wealth of $22.6bn, belongs to the royal family of Saudi Arabia. What’s more, it is estimated that 30 per cent of Africa’s national wealth is held in offshore accounts filled regularly by plutocrats throughout the continent.
Surely that’s not the world we want. Better redistribution of wealth through a fair taxation system that aims at building more schools and hospitals, not more yachts for the rich, is what we really need in order to create a fairer society where no one is left without.
Mohammed Samaana is a freelance writer based in Belfast