Professor Lucas Chancel: Antidote to changing tax policies

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Economic inequality is not decreasing in the world. Different countries, rich and poor, men and women, education, health. Professor Lucas Chancel, a senior economist at the Paris School of Economics, said that the world economy tends to increase these inequalities. He said that inequality is also severe in India. About 200 economists and statisticians from various universities and research institutes around the world have prepared the 'World Inequality Report-2026' on the reasons for the non-reduction of gaps. Lucas, leading economists Thomas Piketty, Rovadia Mesrif and Ricardo led the study under the auspices of the 'World Inequality Lab'. The highlights of the interview given by the coordinator of this study, Professor Lucas Chancellor, to 'Today's Special Correspondent' ML Narasimha Reddy...

What are the main findings of the study on inequalities?

The income of the top ten percent of the world's population is much higher than the income of the remaining 90 percent. The bottom fifty percent of the poor receive less than ten percent of total global income. Wealth is more concentrated. The top ten percent own a third of the world's wealth. The wealth held by the bottom fifty percent is only two percent. Looking deeper, even among the top 10 percent are the super-wealthy 0.001 percent of multimillionaires—who have more than three times as much wealth as half of the population. Their share is steadily increasing. The wealth of the richest 0.001 percent (about 60 thousand people) will increase from 3.8 percent in 1995 to 6.1 percent by 2025. This gives an idea of ​​how severe the disparities are. 

What is the level of economic inequality between populations in different countries around the world?

Inequality in wealth has worsened since the 1990s. While there is a moderate growth in the wealth of the poor, the wealth of those at the top is growing at a much higher rate. As a result, the global economy is dominated by a very few. On the other hand, crores of people are unable to meet even the minimum requirements. There are also differences in the impact of climate change. There are serious inequalities between men and women. On average, a woman earns only 32 percent of what a man earns per hour. The difference is even greater if the labor involved in housework is taken into account. Women work longer hours but earn less. Women work an average of 53 hours a week, while men work only 43 hours. Even among the countries there is a lot of disparity. Spending per student in the US is 40 times higher than in sub-Saharan Africa. This is the situation in many countries. Rich countries spend only 0.3 percent of GDP on aid in poor countries. But what is taken from those countries is up to one percent. In low-income countries, there is no condition to undertake education, health and climate change prevention programs. 

What is the situation in India regarding wealth and income?

India is one of the most unequal countries in the world. The top ten percent share 58 percent of the national income, while the bottom fifty percent share only 15 percent. Wealth inequality is even greater. The richest 10 percent own 65 percent of the wealth, while the top one percent own about 40 percent. The income gap between these two groups has remained constant over the past decade. The participation of women workers is only 15.7 percent. Income, wealth and gender inequality in India as a whole remain severe.

What measures are needed to reduce inequalities? 

While governments talk about inequality, wealth is increasingly concentrated among the few. The reason for this is that the governments have not introduced modernity in the taxation system. Here I am talking about all the governments of the world. There is no difference between rich and poor countries. They are not ready to face the real challenges facing the society. Due to the mobile nature of financial resources in the modern world, investments move easily from one country to another. It makes it easier for the super rich to avoid tax. So modernity in taxation means taxation of wealth. Such measures are necessary as inequality at the highest level is increasing exponentially.

Is there a situation where governments take firm decisions and implement them?

Governments are still doubtful in this regard. Waiting. It is a good development that specific proposals on collecting high amount of income tax from the very rich are coming in the recent G20 conference. This led to a proposal to impose a 2% minimum tax on the millionaires worldwide. These can be implemented voluntarily in all countries. Until this happens the odds will continue to grow exponentially. In recent times, governments have not had the resources to spend on health and education. One of the reasons is that many of the rich do not pay tax. If taxes are collected from them, resources will increase for utility programs. A majority of people from all walks of life have supported these policies in surveys conducted around the world. Leaders are not ready for this. But at some point they will also agree. Apart from new tax policies, international organizations should be set up to monitor the reduction of global inequality through governments.

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