World leaders, powerful corporate executives and influential activists will come together this week at the World Economic Forum in Davos, Switzerland. At the top of the agenda is “stakeholder capitalism” – the idea that corporations should consider the interests of all stakeholders, including employees, customers and communities, not just those of their own shareholders.
To be sure, if there was ever a moment to recognize that we are all in it together – regardless of race, creed and class – it is now.
The ecological catastrophe fueled by climate change and the socio-economic upheaval threatened by grotesque inequalities of wealth and power have the potential to destroy everything we care about.
Based on a mountain of inter-disciplinary evidence, it’s clear that extreme inequalities of income, wealth and opportunity undermine democratic institutions, destabilize healthy economic activity, fuel social unrest, and prevent us from nimbly responding to ecological threats.
Yet our global economy is on inequality autopilot, funneling wealth upwards at a dizzying pace. A couple thousand billionaires now hold more than half the world’s wealth and with it, much of the power to change things – or to block change, as has been the case for decades.
So it would seem a positive sign that many of those billionaires will be joining policymakers and activists this week in Davos to discuss how best to go about changing things. The problem? As last year’s Forum showed, the singular most impactful thing they could do is generally the last thing they want to talk about: that is, paying higher taxes.
In many countries, the wealthy pay lower effective tax rates than those with modest means. Without this revenue, governments plead austerity or take on nihilistic levels of debt.
Meanwhile, a wealth-defense industry of tax lawyers and wealth planners spend their waking hours gaming tax laws and hiding trillions in wealth. An estimated 10 to 12% of the world’s wealth is hidden in a maze of offshore secrecy jurisdiction, trusts and shell companies. A recent IMF study estimates that 40% of foreign direct investment – about $15tn – passes through “empty corporate shells” with “no real business activities”.
This hidden wealth isn’t basking on a Caribbean island. Billions are flowing into luxury real estate investments. The cranes rising across our major cities, constructing luxury towers, are an affront to residents facing a crisis in affordable housing.
In many countries, we are seeing a breakdown in social cohesion and a rise in xenophobic nationalism and political extremism. People understandably believe the system is rigged against them, fueling a sense of unfairness and diminished social trust.
This process of pulling apart, both within countries and between nations, will all but guarantee that the global community will further polarize and fail to adequately respond to the looming climate catastrophe. This will be disastrous for everyone, including the planet’s billionaires and millionaires.
The choice is stark: do we want pitchforks or a working tax system?
As a member of the US-based Patriotic Millionaires, which is composed of millionaires and billionaires from around the world advocating for higher taxes on the wealthy, I agree with Dutch historian Rutger Bregman, who said last year, “Stop talking about philanthropy and start talking about taxes.”
The bloom has come off the charitable rose. Perhaps the public has started to realize that billionaire philanthropy has become a taxpayer-subsidized extension of private power, another elaborate tax dodge.
The Patriotic Millionaires have convened an initial group of 123 millionaires and billionaires from eight countries with a global call to action.
We believe that taxes are the best and only appropriate way to ensure adequate investment in the things our societies need. We agree with the IMF managing director, Kristalina Georgieva: “Marginal tax rates can be raised without sacrificing economic growth.”
Unfortunately these are things that won’t get the attention they should this week. The inconvenient truth is that the best solution to our most pressing problems may cause some discomfort for many of those invited to Davos.
Yet every solution to the global challenges we face requires higher taxes on millionaires and billionaires like us. That’s why we urge others with wealth to accept this simple fact and help us get about the business of repairing our fractured world – including working together to advance effective tax systems within our respective countries and internationally.
Our invitation, to our fellow global millionaires and billionaires, is nothing less than to rejoin humanity. Park your private jet and root yourself in a community – not a wealthy enclave but a real community of people and relationships of reciprocity.
Bring your wealth home. Bring it out from the shadows, the tax havens, the opaque trusts and secret accounts. Shift capital out of the speculative financial sector and deploy it in service of humanity. Invest in places and in the rooted enterprises that produce the food, goods and services that people depend on.
Share your wealth while recognizing that philanthropy is not a substitute for adequately funded governments at the local, state and federal level. Pay your fair share of taxes. Redeploy the professionals who have spent decades working to reduce your taxes down and hide your wealth.
Engage with your families and peers and invite them to join this effort and sign our Call to Action. Encourage them to pay their taxes. The hour is getting late and we may not be able to ask again.
Chuck Collins is a member of the Patriotic Millionaires and is the great-grandson of the US meatpacker Oscar Mayer. He directs the Program on Inequality at the Institute for Policy Studies and is the author of Born on Third Base