Rebecca Riddell ■ Inequality Inc.: How the war on tax fuels inequality and what we can do about it


Last month, as the ultrarich gathered in Davos, Switzerland, Oxfam released its annual report on global inequality: these are boom times for billionaires while much of the world is being left behind. Collectively, billionaires have grown $3.3 trillion richer since 2020. The five richest men have seen their fortunes more than double. At this rate, we expect to see the first trillionaire within a decade. Unfortunately, for most of the world, the picture looks very different. Following a pandemic that devastated lives and livelihoods, as well as a prolonged cost-of-living crisis, climate breakdown and conflict, the collective wealth of five billion people has fallen and the wages of nearly 800 million workers have failed to keep up with inflation.

We’ve lived through a war on tax

In this year’s report we focus on how corporate and monopoly power sit at the heart of this, creating and sustaining a new global gilded age. Tax is central to this. We focus on the intimate connection between taxation, corporate power and inequality, and on how a “war on taxation” has benefited companies and their wealthy owners, but deprived societies of resources needed for inequality-busting policies.

We look at the collapse of taxes on corporations and their owners in recent decades. Statutory corporate tax rates have fallen in 111 out of 141 countries between 2000 and 2023, and have more than halved in OECD countries since 1980. Of course, tax havens, widespread use of wasteful tax incentives, and aggressive tax planning has resulted in actual tax rates far lower than the statutory ones, and often closer to zero. Globally, the actual corporate tax rate has dropped by a third from 1975 to 2019, from 23 per cent to 17 per cent. We also look at the very low tax rates on the types of income that shareholders receive from corporations, like dividends and capital gains. In OECD countries, the average top rate for dividend income has declined sharply since 1980, and in some countries it is simply not taxed. Capital gains, often the most important source of income for the wealthiest, are not taxed at all in one in five countries.

Corporate tax dodging deprives everyone of resources

Our report breaks down how this collapse has turbocharged inequality. It has robbed governments of revenue to spend on social protection, public services, and other programs and policies that address inequality. These effects have been inflicted with great global injustice, with many global north countries extracting wealth but paying little to no taxes, and global south countries disproportionately affected by corporate tax avoidance. It is also a gender issue: women are particularly affected by corporate tax dodging, as they are the primary users of public services and the main providers of unpaid care work (the demand for which increases to fill gaps left by declining public provision). Women are also especially impacted because they are disproportionately employed in the public sector.

Tax cuts for the richest

Corporate tax cuts haven’t just deprived societies, they’ve benefitted the richest. Corporate income tax is progressive. Most of its burden falls on forms of income, like dividends and capital gains, that are disproportionately received by the wealthy. This is because corporate ownership isn’t equally distributed but is instead highly concentrated among the richest. The fortunes of many of the world’s wealthiest people consist almost entirely of holdings in the corporations they’re associated with. Globally, the top 1 per cent hold 43 per cent of assets. This is why corporate tax cuts are essentially tax cuts for the rich. Economists Emmanuel Saez and Gabriel Zucman have shown, for example, that the massive fall in taxes paid by the richest in the United States was significantly driven by cuts to corporate taxes. 

There is cause for hope 

The tax justice movement has shown the way. There are practical, popular steps governments can take today to fight back against corporate tax dodging and address inequality. These include increasing taxes on corporations and on the superrich – something even millionaires and billionaires are calling for. At Oxfam, alongside many others in civil society, we support permanent wealth taxes, taxes on windfall profits, and steps to curb tax avoidance by corporations, like public country by country tax reporting. A modest wealth tax on the world’s multimillionaires and billionaires could generate US$1.8 trillion a year globally. The G20, under Brazilian leadership, can champion a new global consensus to tax the world’s richest individuals. After a historic vote, and despite the lamentable opposition of a number of rich countries, the UN has adopted a plan to establish a much-needed framework convention on tax, with 125 countries backing a measure led by African countries to introduce fairer, more equitable tax policies. Solutions like these are how we can end extreme inequality and fulfill the rights of all.

You can access the report here

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