This estimate is based on the global wealth tax proposal from Thomas Piketty in his latest book Capital and Ideology.34 The wealth tax is highly progressive, with the richest segments of elites paying much higher rates than the rest of society.35 A successful wealth tax would quickly shrink the fortunes of the rich, reducing the revenue raised over time. The $4.417 trillion a year estimate already takes this into account, as it assumes that the top 1% wealthiest households on average see their share of wealth reduce from 20% to 10% due to the tax.
Implementing a global wealth tax will have to overcome several obstacles. Firstly, as there is currently no global tax collector, consensus would need to be reached between governments to implement the same progressive wealth tax at the national level and redistribute the revenues globally. Secondly, the high tax rates on the very rich would undoubtedly inspire a fierce backlash from a global elite, unwilling to see their fortunes redistributed, which could stall and dilute demands for tax progressivity. The $4.417 trillion total is, therefore, an illustration of the orders of magnitude of potential revenues, rather than an exact figure that can be collected immediately. However, with the right ideas, timing and political will, quick shifts are possible. Take the history of the progressive wealth tax itself: five years ago it was an idea on the margins of society. Today, many countries are seriously thinking about implementing it.36
1a. A billionaire wealth tax could raise $70 billion37 to $100 billion a year38
A quicker proposal to implement, and one advocated for by Oxfam, would be to just tax all fortunes over a billion dollars at a small rate of 1.5%.39 The tax would only impact billionaires, who hold 2.7% of the world’s wealth and make up only 0.00002% of the world’s population. In 2019, the world’s billionaires, only 2,153 people, had more wealth than the poorest 4.6 billion people combined.40
1b. A millionaire wealth tax could raise $1.159 trillion a year41
If we implemented a 1% tax rate on all net wealth over a million dollars, we could raise well over a trillion dollars a year. If the rate was raised to 5%, $5.795 trillion could be raised. Some millionaires are even asking to be taxed at a higher rate!42
1c. A tax on the wealthiest 1% in each country could raise $418 billion a year43
A very small tax rate of 0.5% on the net wealth of the richest 1% in each country could raise nearly half a trillion each year. See the report by Oxfam to understand how this $418 billion is broken down per region in the world.44