Global income and wealth inequality have increased dramatically in the last decade. Public money for acutely needed action on social and environmental problems has been missing in many cases. The excessive wealth concentration erodes our societies’ social contracts and challenges the independence of democratic institutions. In the Covid-19 Coronavirus pandemic, governments and societies are now facing enormous costs. Millions of workers are losing their jobs, millions of businesses are going broke. In absence of a globally coordinated and solidary response, economic recession, increased financial fragility and a new debt crisis are likely consequences of the current situation.
It is time to spend, but where should the money come from? Progressive taxation sounds like a plausible solution as it makes the rich pay their fair share and spares the poor and vulnerable. But how can it work? Even in states with a progressive income tax, billionaires may pay very little channeling their assets in ways that reduce their taxable income. How could this be avoided? Would a progressive wealth tax lead to a redistribution of wealth to middle class and lower income groups? What measures against tax evasion and tax avoidance are necessary to ensure that rich individuals or Multinational Corporations do not hide their money in assets that are subject to tax exemptions, tax havens or in foreign financial institutions? How does the ongoing reform process of the international tax system reflect on these questions?
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This Global Table is part of the Digital Global Solutions Summit 2020.