Tax havens are partly to blame for the rising level of income inequality, according to a new report from Oxfam America.
The report, An Economy for the 1%, describes how the wealth of the poorest half of the world’s population, encompassing more than 3.6 billion people, has fallen by a trillion dollars (or about 41 percent) since 2010. In contrast, the wealth of the richest 62 people has increased by more than half a trillion dollars to $1.76 trillion.
According to the report, an estimated $7.6 trillion worth of individual wealth sits offshore, one-twelfth of the total. Oxfam said that if tax were paid on the income that this wealth generates, an extra $190 billion would be available to governments every year.
Oxfam pointed out that nine out of 10 of this year’s World Economic Forum corporate partners have a presence in at least one tax haven. It estimates that tax dodging by multinational corporations costs developing countries at least $100 billion every year. Corporate investment in tax havens nearly quadrupled from 2000 to 2014.
Other factors are also to blame besides taxes, such as wage stagnation. One of the other key trends behind rising inequality outlined in Oxfam’s report is the declining share of national income going to workers in nearly all developed and most developing countries and a widening gap between pay at the top and the bottom of the income scale. In the United States, the salaries of CEOs at the top companies have increased by half since 2009, while ordinary wages have hardly moved up. The minimum wage has been stuck at $7.25 since 2009, while the cost of living has surged.