• poa20 input2.3

last modified March 9 by facilitfsm


Inequality and Taxes … (feb 2020)


It all started in 1990 when the World Bank proposed to make poverty 
reduction the main priority for development cooperation, after ten years 
of disastrous ‘structural adjustment’. Most UN organisations followed.

There was some criticism, surely. And even if the World Bank and the UN 
Development Programme radically and explicitly rejected any social 
protection organised by public authorities, they did change their mind 
some ten years later. They now promote social protection though they 
also have hollowed out its meaning and its scope. In fact, what they 
propose is a limited social protection for the poor and limited labour 
rights in cooperation with the State and employers.

 From this point of view, the ILO’s Social Protection Floors are much 
more interesting, though here again, there are severe limits.

Moreover, whatever perspective you take, there is the problem of 
resources. States do need money to offer to all their citizens and 
residents free schooling, health care, housing, public services of 
water, energy, transport, communication, that is, the whole range of 
economic and social rights. And with the fiscal austerity rules that 
remain in place in most parts of the world, this is not easy to provide.

We all know of course the solution: taxes. In most parts of the world 
taxes have been lowered in the past decades, following the neoliberal 
dogmas. And tax havens have been very successful! Illicit flows of money 
from the South to the North remain shockingly high!

There is no reason this should remain this way.

In the context of the Financing for Development Conferences, civil 
society has made several very good proposals for financing development 
needs, but till now nothing or very little has materialised.
Taxes are a national competence, though this does not mean that 
international cooperation is not of the utmost importance. It is indeed 
too easy to react with a ‘yes, but this is a national competence’ 
whenever international cooperation proposals are made, or with ‘yes, but 
there will be capital flight’ whenever a national proposal is on the table.

In order to finance social protection, Isabel Ortiz from the ILO already 
listed a whole series of possible sources for financing, such as the 
re-allocation of public expenditures; Increasing tax revenues; Expanding 
social security coverage and contributory revenues; Lobbying for aid and 
transfers; Eliminating illicit financial flows; Using fiscal and foreign 
exchange reserves; Managing debt: borrowing or restructuring existing 
debt and; Adopting a more accommodative macroeconomic framework.

Here, I want to point to an interesting initiative taken by two French 
researchers in Berkeley, California, Emanuel Saez and Gabriel Zucman.

Because inequality is high on the agenda during the election campaign in 
the U.S., they used the data of their academic research to show how much 
difference taxes can make.

We know from Thomas Piketty’s books how the big inequalities in Europe 
and the U.S. came to an end after the first world war and the crisis of 
the 1930s and how high taxes on income and property kept them down till 
the 1980s. Rates went op to 80 and even 90 %! With the introduction of 
neoliberal policies, taxes were lowered and inequalities were able to 
grow again.

What Saez and Zucman did was calculate what the wealth of some rich 
people would be if policies like those proposed now by Bernie Sanders or 
Elisabeth Warren had been introduced in 1982. Well, with Sanders’ plans, 
Jeff Bezos (Amazon) would not have 160 billion US$, but ‘only’ 52.2 
billion US$. Bill Gates (Microsoft) would only have 13.5 billion US$ 
instead of his current 97 billion US$. With Pete Buttigieg’s plans, 
nothing would change …

Just imagine the huge amount of money that would have been available for 
social policies, for health care, etc!

What these researchers want to make clear is that high tax rates existed 
in the past and it is perfectly possible to introduce them again today.

What is needed though is a better coordination of policies and a better 
cooperation between social movements. Globalisation is no excuse for 
lack of equitable tax policies, and global or continental tax 
initiatives should not be made impossible by national vetoes.

What it means is that social movements should learn to articulate their 
actions between different political levels, from local to national to 
continental and global. It is not an easy task, but it is perfectly 
possible.

It is a very positive thing to note that inequality is high on the 
agenda today. Inequality is a much more serious problem than poverty. 
One should know that the problem of poverty cannot be solved with 
‘fighting poverty’; what is needed is a fully fledged social protection 
policy and a fight against inequality. With taxes. This is where it begins.

More cooperation is certainly needed, at the global level. Why not think 
of a big campaign at the next World Social Forum in Mexico City in 2021, 
at the 20th anniversary of the Forum? Actions are needed to give new 
life to this WSF, a coordinated action on taxes seems to me to be a very 
welcome initiative!

And for those who want to make their own calculations: look at 
www.taxjusticenow.org. Success!

Francine

And do not forget to look at the new articles on 
www.globalsocialjustice.info !