Call To Make World’s Wealthiest Pay More Tax

Many governments of the world’s leading economies are considering an eight-point plan to make the wealthy pay more tax.

The Organisation of Economic Co-Operation and Development (OECD) has published a paper outlining the proposals recommending the reforms to the governments of the 34 nations the belong to the group.

The OECD claims the richest 1% of the world’s earners have seen their wealth increase over the past three decades at the expense of the poorer 99% and that they should pay a larger share of taxes.

“The gap between the wealthy and the poor is likely to grow wider if governments do not act now, “said OECD Secretary-General Angel Gurría. “Making the richest pay a fair share of tax is one way to ensure the gap narrows.”

8-point plan for tax reform

To accomplish this, the OECED recommends:

  • Axing or reducing tax reliefs and allowances which help high earners ahead of other taxpayers
  • Taxing all earnings as income, including expenses, benefits, carried interest deals and stock options
  • Charging more taxes on property rather than income
  • Increasing inheritance taxes
  • Reviewing capital and income taxes to give a better balance between them
  • Bringing in better international tax laws to stop the wealthy ‘shopping’ for financial jurisdictions that will charge them less tax on money earned in other countries
  • Rewrite income tax rules to reduce the opportunities for avoidance
  • Increase the automatic exchange of financial information between tax authorities

The OECD reports that the top 1% of earners have seen their incomes rise by 37% in Canada and 47% in the USA since 1984.

Poor fail to keep pace

But although the wealthy have seen their income soar, money going to the poorest households has not kept pace.

OECD figures show that while the wealthiest 1% saw their incomes grow by 4% in 2010 – the last year figures are available for – the rest of the population mainly saw their incomes stand still.

“Many poorer households are worse off than they were 30 years ago. Ignoring the income growth of the top 1%, incomes have increased at much lower rates in many countries. This is the explanation behind many people feeling their incomes have not improved at the same time as the economies in the countries where they live,” said the OECD report.

OECD reports are influential on member government policies, including the UK, US, Japan and many EU and emerging market nations. The OECD is also leading the overhaul of a global tax information exchange network due to start in 2016. More than 50 countries have already signed up to join the network.

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