62 Billionaires Own the Same Wealth as Half the World
Today, 62 billionaires own the same wealth as half of the world’s population. What’s more shocking, is that figure that has fallen from 388 people in just five years. Everyone is talking about inequality, from the President during his State of the Union, to most of the candidates on the campaign trail vying for his job, from the Pope to the head of the IMF. But no real action has been taken and the gap between the richest and the rest of us continues to widen dramatically.
This extreme inequality is not inevitable; it is the result of a skewed economic and political system that favors the few at the expense of everyone else. And at the heart of this rigged system are tax havens, which enable wealthy individuals and large corporations to avoid paying their fair share of taxes, depriving governments the resources they need to provide public services and tackle rising inequality.
An estimated 7.6 trillion dollars of wealth is hidden away in tax havens today. If taxes were paid on this money, an extra $190 billion would be available to governments of all sizes to invest in schools, hospitals, and roads.
How are tax havens perpetuating extreme inequality?
When we met Morgan, he said he thought he was five years old but he wasn’t sure. He was playing at a dump in the Mukuru slum in Nairobi, Kenya while his mother worked, sorting through the trash. The local children often go there to scavenge for food scraps, or work alongside the adults. Morgan told us he wasn’t at school as his family couldn’t afford it.
While people like Morgan and his mother go without basic services like sanitation and water, files leaked in February 2015 revealed this injustice taking place:
A small number of rich people connected to Kenya were stowing away around $560 million in bank accounts in Switzerland.
This is just one example of a huge problem that’s happening around the world, not just in Kenya. Tax havens are at the heart of a global system that allows large corporations and wealthy people to avoid paying their fair share, depriving governments, rich and poor, of the resources they need to provide vital public services and tackle rising inequality.
It’s estimated that a total of $7.6 trillion of individuals’ wealth is hidden in offshore tax havens. If taxes were be paid on the income that this wealth generates, an extra $190 billion would be available to governments like Kenya to invest in public services like health care and education.
What could be accomplished with these hidden tax dollars?
“Sometimes I run out of ideas. We have been hit by such calamities. It’s difficult to know how to continue. I only manage through survival.”
–Barbara Chinyeu
Zambia is among the top ten fastest growing economies in the world, but most of the population is not seeing the benefits of this economic development. Economic growth is expected to increase over the next five years, yet poverty rates continue to rise. More than 60 percent of the population is living below the international poverty line. Half the country’s children aged five and under suffer from chronic malnutrition or stunting and the prevalence of HIV is among the highest in the world.
One of the reasons inequality in Zambia is so bad is because global tax rules allow multinational mining companies to generate vast profits from their operations in the country, while paying very little tax. Rural areas are extremely poor; there are very few jobs, inadequate health centers, schools, and roads. This lost revenue is desperately needed to improve infrastructure and invest in public services.
The tax African countries lose as a result of personal wealth hidden in tax havens would be enough to:
- Save the lives of 4 million children and 200,000 mothers
- Prevent nearly one million stillbirths each year
- Employ enough extra teachers to educate every child in Africa
Seven out of ten people on the planet now live in countries where economic inequality is worse than it was 30 years ago. Tax havens allow multinational companies and wealthy individuals to avoid paying their fair share while 896 million people worldwide are trapped in extreme poverty.
Ending the era of tax havens
The Global Alliance on Tax Justice defines tax havens as jurisdictions or territories that have adopted tax policies and laws allowing non-residents — people or legal entities — to minimize how much tax they pay in places where they create their wealth. This allows for very low or zero taxation and secrecy over who really owns and profits from assets.
With extreme wealth comes great political power. Decades of government deregulation and bad political choices have allowed big corporations and millionaires to use their immense influence on political leaders to drown out the voices of hardworking people and rig the rules to their advantage. They exploit loopholes with shell corporations and offshore tax havens, and erode worker protections so they don’t have to pay fair wages.
How can you take action now?
Oxfam is calling on governments to create a more comprehensive global approach against harmful tax practices that have countries, rich and poor, missing out on hundreds of billions of tax dollars. The US Congress can do its part by passing the Stop Tax Haven Abuse Act.
Governments need to act together to ensure individuals and multinational companies report where and how much money they make in every country where they do business and to end secrecy about who really owns all companies, foundations and trusts. This kind of transparency would help to ensure taxes are paid where business is done, benefiting millions of the world’s poorest people, including people like Morgan and Barbara.
Take action to help end an era of extreme inequality and put an end to tax havens! Here in the United States, we must demand that Congress to pass the Stop Tax Haven Abuse Act.
Find out more at www.oxfamamerica.org/evenitup
