The video explores the reemergence of wealth taxes as a method to address global income inequality, fueled by recent data suggesting the richest individuals own a disproportionate percentage of the world's wealth. With rising inequality, there's growing pressure on affluent citizens to pay increased taxes. Policymakers globally, including in the U.S. and Colombia, are proposing taxes targeted at the super-rich, while debates persist on the structure and efficacy of such a tax.

Wealth taxes target the net worth of high-wealth individuals, differing from income and capital gains taxes that tax earnings and asset profits. Proponents argue they could rebalance economic disparity and provide significant revenue gains used to alleviate poverty. Critics, however, caution against possible negative repercussions like capital flight and the complexity of asset evaluations, which may undermine the intended financial benefits.

Main takeaways from the video:

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Key Vocabularies and Common Phrases:

1. redistribution [ˌriːdɪˈstrɪbjuːʃən] - (noun) - The act of distributing something in a different way, often more fairly or equally. - Synonyms: (reallocation, repartition, redirection)

But the concept of wealth redistribution is gaining traction amid rising global inequality.

2. inequality [ˌɪnɪˈkwɒlɪti] - (noun) - A situation in which resources, opportunities, and privileges are distributed unevenly within a society. - Synonyms: (disparity, imbalance, disproportion)

Global wealth inequality has risen significantly over recent years...

3. patriotic millionaires [ˌpeɪtriˈɒtɪk mɪljəˈneəz] - (noun phrase) - A network of wealthy individuals advocating for higher taxes on the rich for the wider benefit of society. - Synonyms: (wealth advocates, rich reformists, affluent campaigners)

Retired business owner Phil White is part of a growing network of so called patriotic millionaires who are urging governments to tax them more.

4. holistic [həʊˈlɪstɪk] - (adjective) - Considering the whole system rather than individual components. - Synonyms: (comprehensive, integrated, inclusive)

Wealth tax is seen as a more holistic way of accounting for an individual's total wealth.

5. assets [ˈæsɛts] - (noun) - Items of value owned by a person or company, regarded as having economic value. - Synonyms: (properties, holdings, resources)

A wealth tax is a broad based tax on the value of all or most of the assets belonging to a wealthy individual or household...

6. threshold [ˈθrɛʃˌhoʊld] - (noun) - A set point or limit at which something begins or changes. - Synonyms: (limit, boundary, cutoff)

If you want a wealth tax that's actually going to be effective at the top end, you typically want to start at quite a high threshold to do that.

7. exemptions [ɪɡˈzɛmptʃənz] - (noun) - Items or individuals excluded from an obligation, such as a tax. - Synonyms: (exclusions, exceptions, immunity)

One of the problems that some countries have faced with the wealth taxes that they had was they had lots of different exemptions.

8. encompass [ɪnˈkʌmpəs] - (verb) - To include comprehensively or completely. - Synonyms: (include, cover, embody)

According to patriotic millionaires, that tax could be levied at around 2% of wealth, over $10 million, and would encompass broad sources of wealth.

9. limitarianism [ˌlɪmɪˈtɛəriənɪzəm] - (noun) - A political philosophy proposing a limit on the amount of wealth individuals can accumulate. - Synonyms: (wealth cap philosophy, wealth ceiling principle, fiscal constraint ideology)

There are people who are talking very seriously about the idea of limitarianism and saying there's this limit on total wealth that people should be allowed to have...

10. capital flight [ˈkæpɪtəl flaɪt] - (noun phrase) - The rapid movement of money or assets out of a country due to economic or political instability. - Synonyms: (capital outflow, monetary evacuation, financial exodus)

Researchers are divided over the risk of capital flight from a wealth tax, with some arguing that the cash outflows would be limited.

Taxing the super-rich - Could a 'billionaire tax' work?

Stealing from the rich and giving to the poor is considered the stuff of folklore, as seen in this 1973 Disney film, Robin Hood. Robbed. I'd be robbed. But the concept of wealth redistribution is gaining traction amid rising global inequality. How would you describe your level of wealth? Probably moderate. I mean, I'm certainly, you know, in the top 1%, probably the top 0.1%. Retired business owner Phil White is part of a growing network of so called patriotic millionaires who are urging governments to tax them more. Talking about extreme wealth, we're talking about multimillionaires and billionaires. Global wealth inequality has risen significantly over recent years, with the richest 1% bagging two thirds of all new wealth created since 2020. The poorest 50% of the global population now own just 2% of total net wealth, while the richest 10% hold 76% of that. The wealthiest 1% own around two thirds. That's piling new pressure on the world's richest to pay higher taxes, something that's known as a wealth tax.

A g 20 meeting in Brazil in early 2024 saw finance ministers explore plans for a global minimum tax on the world's 3000 billionaires to ensure the hypermobile super rich pay their fair share. At one end, it's just a search for revenue. One natural place to go is to think, well, let's go to the people with the biggest wallets. But can such a tax work in practice, and is it likely to take hold? A wealth tax is a broad based tax on the value of all or most of the assets belonging to a wealthy individual or household, such as cash, property, vehicles, jewellery and other valuable items. Unlike income tax, which is charged against annual earnings, and capital gains tax, which is imposed on profits accrued from the sale of an asset, wealth tax is seen as a more holistic way of accounting for an individual's total wealth.

If you want a wealth tax that's actually going to be effective at the top end, you typically want to start at quite a high threshold to do that. Then you can design a tax really focused on that group and works really well for that group. And we use other taxes like capital gains tax and taxation of dividends inheritance tax, to cover that much more. Mass market wealth taxes were once a prominent source of tax revenues in Europe, though implementation dwindled at the turn of the 21st century amid concerns over their efficiency and a broader shift toward lower top end tax rates.

One of the problems that some countries have faced with the wealth taxes that they had was they had lots of different exemptions. They said, we're going to exclude certain asset classes, we're going to have reliefs in various places. And all of these things sort of undermined the tax base. For the wealth tax, it meant that not all of the wealth was included. That meant you weren't getting as much money, but also it meant that people were really against it because it feels like playing favourites.

As of 2024, Switzerland, Norway and Spain are among the few countries to impose some form of wealth tax. But the divisive economic policy is once again gaining traction as policymakers look for new ways to address rising inequality and shifting demographics. Colombia introduced a wealth tax in 2022, and the scottish government has previously proposed a new tax on the super wealthy. Even US President Joe Biden's 2024 budget included plans for a 25% billionaires tax on the wealthiest 0.01%. If you make a billion bucks, great, just pay your fair share.

The proposals come amid growing pressure on rich citizens to bear more of the tax burden as public finances come under strain from aging populations, legacy Covid-19 debt and green financing a 2023 report from the EU tax Observatory called for a global wealth tax on the world's 2756 known billionaires, noting that a minimum 2% annual tax on wealth could raise $250 billion per year. Meanwhile, a separate Oxfam report found a tax of up to 5% on the world's multi millionaires and billionaires could raise $1.7 trillion a year, enough to lift 2 billion people out of poverty.

And the plans have broad public support. A 2023 YouGov poll found that more than three quarters of Britons would support a tax on millionaires. However, tax specialists note that in practice, such policies can be hard to enforce, with questions arising over which assets should be taxed and who should be responsible for evaluating their value. If you have a wealth tax that only applies to certain assets, and other assets are exempt, that can lead to behavioral patterns where individuals will then shift their wealth into exempt assets. That potential for behavioural shifts is among the top arguments levelled against a wealth tax.

Critics point to the increased risk of a wealth exodus among the highly mobile super rich, including to tax havens, which they say undermines original efforts to boost government coffers. We certainly see individuals looking at other countries to see if there was a wealth tax to be introduced. Would there be merit in moving in 2022, when Norway increased its wealth tax on residents with assets above 20 million norwegian krona, many flocked to Switzerland. Entrepreneur Tord Kolstadt is one of approximately 70 super wealthy Norwegians who made the move in 2023 in response to what he described as the punitive tax measure, they double this taxation from one day to another. And this is the reason because norwegian business owners are forced to leave the country.

This is a great impact for a lot of people, me as well, and it's not sustainable in the long run. Researchers are divided over the risk of capital flight from a wealth tax, with some arguing that the cash outflows would be limited. But they do raise other concerns over the cost of such a policy and its ability to redistribute wealth. Data suggests that wealth tax accounts for only a very small proportion of total tax revenues in the countries where it has been applied, and often those revenues have failed to increase much over time.

There is more cost on the tax authority side because theyll definitely need to be doing additional valuations that theyre not having to engage with now. A different area of cost that you could be worried about is what does it do to, for example, incentives to invest? It could be the case that if you introduce a tax that affects investment, people might want to invest less. Still, some wealthy individuals, like white, continue to spearhead calls for a redistributive wealth tax.

This is about the wealthy contributing more to society, the extremely wealthy contributing more, and being proud to do that actually, and contribute to the kind of society we want to live in. We're also talking about actually fairer tax on income from wealth, tax on dividends, tax on capital gains, and those kinds of things which again are disproportionate at the moment. They're actually lower than taxes on income, which doesn't really sound fit. In early 2024, White was one of more than 260 millionaires who signed an open letter to world leaders calling for higher taxes for the wealthy.

Other high profile signatories include Disney, heiress Abigail Disney and succession star Brian Cox. According to patriotic millionaires, that tax could be levied at around 2% of wealth, over $10 million, and would encompass broad sources of wealth. Such a measure has the backing of more than half of millionaires from g 20 countries, according to a 2024 poll by the non partisan group. Three quarters said they support higher taxes on the wealthy in general.

Still, some argue that millionaires calls for a wealth tax could be their way of safeguarding against a more extreme policy of wealth redistribution. They're typically thinking about rates of 1%, maybe 2% in Spain. It goes up to three at the peak, and those rates raise money from wealthy people. But they're not sort of radical redistribution. I guess there'll be some people who would call for something that's much more radical. There are people who are talking very seriously about the idea of limitarianism and saying there's this limit on total wealth that people should be allowed to have and sort of basically 100% tax above that level.

Global, Economics, Politics, Wealth Tax, Income Inequality, Patriotic Millionaires, Cnbc International