A group of economists proposes a tax on the mega-rich to finance a global climate fund |  Climate and Environment

A group of economists proposes a tax on the mega-rich to finance a global climate fund | Climate and Environment

Climate change is also a story of inequality. Of inequality with respect to those responsible and the victims of a crisis that not only implies an average increase in temperatures, but also a cascade of extreme weather events that bury those who have less in more poverty. A group of researchers from the World Inequality Laboratory—a project led by economists Lucas Chancel and Thomas Piketty—advocates for the creation of an international climate rate on the planet’s greatest fortunes. They propose that the 65,130 people who have a net worth of more than 100 million dollars [unos 92 millones de euros] (0.001% of the world’s adult population) are taxed —between 1.5% and 3% of their fortune— to help those who have less to adapt to global warming and thus protect themselves against this crisis .

If this tax were imposed, the annual collection would be 295,000 million dollars, according to the Climate Inequality Report 2023, which are signed, in addition to Chancel, by the economists Philipp Bothe and Tancrède Voituriez. It is estimated that at the moment the financing flows for adaptation to developing countries are around 29,000 million dollars, well below the real needs in this field, which amount to 200,000 million. The way to close this financing gap is the focus of an important part of the international negotiations on climate change. At the last climate summit, held at the end of last year in the Egyptian city of Sharm el Sheikh, the creation of a compensation fund for the poorest countries was agreed, but it is yet to be defined how this instrument is nurtured and who should go directed. For his part, the UN Secretary General, António Guterres, has proposed that the extraordinary profits of energy companies, the sector that is the main emitter of greenhouse gases, be taxed. Now, this group of economists goes a step further and proposes, among other measures, the establishment of an international climate tax on great fortunes.

The French economist Lucas Chancel points out to EL PAÍS that until now no initiative like this has been launched. Yet, he adds, calls for wealth taxes are popping up all over the world, including at the last World Economic Forum in Davos a few weeks ago. And he adds: “Some countries have introduced or increased progressive wealth taxes in recent years (for example, Norway or Argentina) and others have explicitly connected the introduction of new progressive taxes (on capital income) with the financing of the climate mitigation in the country (this is how the Biden Administration presented its progressive tax reforms in the context of the inflation law during the summer)”. Furthermore, Chancel continues, “Rich country governments have agreed to finance climate adaptation and loss and damage in low-income countries, but are still struggling to find new resources to do just that.”

The proposal of the World Inequality Laboratory contemplates a certain progressiveness. For those whose net assets are between 100 and 1,000 million dollars (62,380 people) the rate would be 1.5%; for those with assets of between 1,000 and 10,000 million (2,584 individuals) the tax would be 2%; for fortunes between 10,000 and 100,000 million (155 adults) the rate would be 2.5%; and for the 11 people who have more than 100,000 million it would be 3%.

“Given the extreme levels of wealth concentration in the world today, even modest tax rates on the greatest wealth can generate substantial tax revenue,” adds the study, which is supported by the Norwegian Agency for Development Cooperation and the United Nations Development Programme. “If they were successfully implemented (even after taking into account some capital depreciation and tax evasion) they would reach around 300,000 million each year,” he concludes.

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The authors are aware that “a global agreement on a tax on extreme wealth to finance climate change adaptation and mitigation is unlikely to be reached in the near future.” However, “a measure of this type can be initiated by a group of countries without the need for consensus” at UN climate summits. “For example, if the United States and European countries implemented such a tax, they would collect around 175,000 million each year”: 121,000 in the US and 56,000 in Europe. This is a significant amount that “could be fully or partially redistributed towards a global climate fund, at no cost to 99.99% of the population of these countries.” Even so, the economists who drafted the proposal stress the importance of other low- and middle-income economies also taxing “the cent-millionaires who live” in these nations “to finance a global climate scheme.”


Beyond proposing this rate, the report focuses on analyzing the inequality of the climate crisis: “Climate impacts are not evenly distributed around the world: on average, low-income and middle-income countries suffer greater impacts than their lower-income counterparts. rich. At the same time, the climate crisis is also marked by significant inequalities within countries. If you go to the causes, you also find a tremendous imbalance. “All individuals contribute to emissions, but not in the same way.” “The 10% of the world’s largest emitters of carbon dioxide generate almost half of all greenhouse gas emissions” on the planet, they give as an example.

The economists point out that “better understanding how groups” of the population “can gain and lose from the energy transition is key to accelerating it.” But they caution that “political conclusions must be drawn from the fact that the major emitters are likely to be relatively well protected from the adverse consequences of climate change.” “Therefore, their incentives to reduce emissions are not necessarily aligned with the harm those emissions cause.” And this is so, they explain, both on the international stage “and within countries”.

public aid

The study also highlights that the climate fight and the battle to end global poverty are not incompatible. “Recent research contradicts the idea that ending global poverty would consume most of the world’s remaining carbon budget to meet the Paris targets,” the authors argue. “Lifting large numbers of people out of poverty does not have to have a large negative effect on climate change mitigation,” they add.

The report makes some recommendations to governments. It points out that measures that are within the reach of governments and are relatively easy to apply, such as taxes on excess profits, could help finance adaptation and mitigation of climate change “without disproportionately harming” population groups with higher incomes. Lower. It points to other pending issues in the global fight against global warming: the elimination of public aid to fossil fuels. And the positive example of Indonesia is highlighted to state that, when the elimination of these subsidies “is accompanied by social reforms” to benefit the population as a whole (such as health insurance), “possible increases in fuel prices do not necessarily result in welfare losses for the poor.

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