The Game is Rigged: Wealth (in)Equality
By Tristan Jose
Equality is a loaded term and we are far away from achieving it in all respects. Racial equality, gender equality and what we want to explore in this article: wealth/income equality. It can be measured in many different ways and the insights and answers vary whether we look at income, housing, wealth, regions and many other factors. It is such a complex and nuanced topic that we can’t hope to do it justice here but I believe there are some points worth considering.
When we spoke to people this year, equality (or rather the lack of it) came up as one of the key problems they saw in the world today so I thought I would share my perspective looking at Europe and the US.
Changing Trends
Post-war Europe until the 1970’s/80’s saw strong growth, rising wages, the emergence of a larger middle class and the development of welfare states across Europe. Social and wealth inequality dropped significantly in this period. So what happened? Is inequality getting worse or does it just feel like it's getting worse as people compare their situation to what they observe, especially in social media?
Since the 1970’s/80’s household income has continued to rise, growing many times faster than national income (GDP). However, wealth inequality started to rise - with higher concentration of wealth in the top 1% and 10% of households. The years since the Great Recession in 2008 saw increasing inequality in the US and many European countries, while others declined - so we can’t say overall that inequality has gotten worse or better in Europe as a whole. So Lets just look at some not-so-fun numbers.
Household Wealth Distribution At a Glance
There are so many ways to measure wealth equality, with one of the most well-known being the Gini Coefficient. Without going into too much boring detail - like most metrics it is not a complete measure. A vast economy and population is very hard to distill into a single metric when looking at equality. So lets cut through some noise and look at some simple facts - they are not fun.
Generated with the help of AI
Generated with the help of AI
Total equality is not a realizable ambition - but then when we consider that the wealthiest 10% hold more than half the wealth and the poorest 50% only 5% (Europe) - surely this balance is off. A sobering thought is that the richest 3,600 Europeans have the same as the poorest 181 million Europeans (which is the populations of Germany, Italy, Spain combined).
Taxes and Fairness
You might be thinking that those are crazy statistics but at least our tax systems allow for the re-distribution of wealth. That is the theory - that the wealthiest contribute much more to the tax coffers of governments so those funds can then be used to support the less advantaged in the population. Unfortunately we would both be wrong: around 80% of tax income comes from ordinary people through their salaries and consumption taxes like VAT (2025).
To put that in perspective - corporate taxes contributed only around 9% and net wealth taxes (we are talking about those wealthy households holding the bag) contributed 0.4%. Only 1 EU country (Spain) has a net wealth tax; 10 countries in the EU have no inheritance tax.
We can all imagine why - the wealthy have the means to game the system and exploit its weaknesses while normal people have no chance to do the same. Just look at how much tax some of the worlds wealthiest people pay in taxes. Donald Trump has a net worth of over 6 Billion USD and paid nothing in 2020 - actually receiving a 5.5million USD refund - fun isn’t it?
What Can We Do?
It might be time to start asking government to consider how the wealthy are taxed vs those who are struggling to keep their heads above water. Oxfams report "A European Agenda to Tax the Super-Rich" calls for:
An EU-wide wealth tax of 5% (in theory could generate up to €286.5 billion/year)
Higher top income tax rates
Progressive inheritance/property taxes
A European assets registry to track wealth
Greater transparency on taxes paid by the richest
65% of Europeans support a tax on the wealthiest individuals. Oxfam states inequality is "not by accident, it is by design" due to decades of tax policies rigged for the super-rich.
Take Action: Look at existing reformation initiatives and petitions in your country through our Petitions Portal (link) - if you are in Germany have a look at: https://weact.campact.de/petitions/ehrensache-erbschaftsteuer-keine-ausnahmen-fur-milliardare.
Further Reading:
https://www.cnbc.com/2022/12/21/trump-income-tax-returns-detailed-in-new-report-.html
