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Opinion | The world will plunge into chaos if we don't tax windfall profits


Joseph E. Stiglitz, Nobel Prize winner in economics, explains why at the juncture of a global crisis it is time for those who benefit from that crisis to pay their fair share in taxes. | Opinion | CNN

Editor's Note:

Joseph E. Stiglitz, a Nobel laureate in economics and a university professor at Columbia University, is co-chairman of the Independent Commission on International Corporate Tax Reform.

The opinions expressed in this column are solely those of the author.  

(CNN) --

It happened again.

Thousands of supporters of former Brazilian President Jair Bolsonaro stormed the country's government buildings on January 8 in protest of the newly sworn-in president.

The riots occurred nearly two years after the storming of the United States Capitol by supporters of outgoing President Donald Trump.

The similarities are obvious: the violence and vulgarity of the attacks against democratic institutions and the goal of sowing chaos while pretending to be law and order.

In both cases, the political leaders questioned the results of the elections and, in general, the values ​​of democracy.

More than half of the world's population lives under authoritarian regimes, and movements persist at the polls that clearly question individual and public liberties and encourage xenophobia.

There are many reasons for this, but among them is an almost universal feeling of grievance.

Many citizens around the world are suffering economic hardship while a part of the population, the wealthy and the corporations they own and control, are doing extremely well.

As the world faces a decade of crisis, it is time for those who benefit to pay their fair share to help alleviate these grievances.

And that can be done in part through taxes.

Take, for example, the coronavirus.

Three years after the onset of Covid-19, a jarring disconnect has emerged between the human cost and the historic profits of many large companies, money that benefited shareholders, who cashed in on a bonanza of dividends, share buybacks, and prices. of shares through the roof.

The pharmaceutical giants have raked in billions in profits from Covid-19 vaccines, which they could not have developed without university research and government subsidies.

And Russia's war in Ukraine has allowed energy and food corporations to boost profit margins by 256% in 2022, compared with the 2018-2021 average, even as ordinary families struggle to pay their bills.

These exorbitant corporate profits are not the result of hard work or sudden creativity.

They are the result of the political situation.

The war caused energy prices to skyrocket, especially the cost of natural gas.

And many regionally produced food products, such as wheat, became inaccessible, causing food prices to skyrocket.

With these high prices came undeserved windfalls.

And they should be taxed at a higher rate than corporations normally pay.

A well-designed windfall tax, which would vary from country to country, can stimulate investment and increase revenue.

The revenue would allow countries to finance increased public services, such as health care, education, and access to water and sanitation, which can help all citizens, especially the most vulnerable.

The tax would also help nations build the infrastructure needed to meet the existential challenge of climate change, such as clean energy services, green transportation, and energy-efficient buildings.

Several countries in Europe have already started implementing a windfall tax.

For the same reasons, it is urgent to tax the richest, some of whom get away with it these days with hardly paying taxes thanks to tax havens, among other strategies.

Oxfam argues – correctly, I think – that there is something fundamentally wrong with a world order in which a man like Elon Musk, one of the richest in history, actually pays taxes of only 3.3%, while Aber Christine, a poor flour vendor in Uganda, is taxed at 40%.

It's an even more shocking gap than the one Warren Buffett denounced nearly 12 years ago, later explaining that he paid taxes at a lower rate than his secretary.

Since 2020, the richest 1% have captured nearly two-thirds of all new wealth.

Making the very rich pay their fair share to finance the expansion of rights like universal access to health and education is not really a radical or even an exotic idea.

After World War II, the United States made it one of its main tools for reconstruction, instituting one of the world's highest peacetime marginal tax rates of 91% in 1951, which was later increased to 92% the following year. next year.

At the same time, taxes on corporate profits were 50%.

Even as recently as 1980, the top marginal income tax rate for the very rich was 70%.

Since then, politicians have systematically cut virtually every tax on the rich, from top-tier income taxes and investment taxes, to wealth and corporation taxes, to inheritance taxes. , claiming that the entire economy would benefit.

You know the rest: Inequality in the US and other countries around the world has skyrocketed, working-class wages have stagnated, working conditions have deteriorated, and debt has skyrocketed.

As for the richest, they have done amazingly well, but they are the only ones.

The same pattern has been repeated around the world, with political consequences that we are seeing in action.

With the inflation crisis, it is impossible to continue avoiding the debate.

As we at the Independent Commission for the Reform of International Corporate Taxation (ICRICT) believe, progressive taxation (making those with the largest fortunes pay their fair share) is one of the most powerful tools for reducing inequality and build more resilient and inclusive societies.

To reject this solution is to force states to institute austerity programs, cutting public services and retirement benefits.

This is a recipe for far greater chaos than what we saw in Washington and Brasilia.

And that is too high a price for the world to pay.

Source: cnnespanol

All news articles on 2023-01-19

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