States urged to use corporate tax in addressing wealth inequality

The inequality crisis remains unaddressed and out of control. Hundreds of millions of people are living in extreme poverty while large rewards go to those at the very top. In 2019, the world’s billionaires, only 2,153 people, had more wealth than the poorest 4.6 billion people combined, according to Oxfam.

A new generation of inequalities is opening up, around education, technology and climate change. The demonstrations that swept across the world last year signal a global revolt against extreme inequality and the poor living standards for a large amount of the world’s population.

Economic inequality is out of control. In 2019, the world’s billionaires, only 2,153 people, had more wealth than 4.6 billion people. This great divide is based on a flawed and sexist economic system that values the wealth of the privileged few, mostly men, more than the billions of hours of the most essential work – the unpaid and underpaid care work done primarily by women and girls around the world.

Tending to others, cooking, cleaning, fetching water and firewood are essential daily tasks for the wellbeing of societies, communities and the functioning of the economy. The heavy and unequal responsibility of care work perpetuates gender and economic inequalities.

Governments around the world must act now to build a human economy that is feminist and values what truly matters to society, rather than fuelling an endless pursuit of profit and wealth. Investing in national care systems to address the disproportionate responsibility for care work done by women and girls and introducing progressive taxation, including taxing wealth and legislating in favour of careers, are possible and crucial first steps.

Faced with popular demands, governments excuse themselves by arguing that their coffers are empty and implementing austerity program. These measures only aggravate economic, social, gender and racial disparities, depriving people of access to health care, education, or housing, especially in developing countries.

Inequality is not beyond solutions. One of the most obvious is to change the international corporate taxation system, which is not only obsolete, but also unfair, since it allows for systematic tax evasion and avoidance by multinationals.  Corporate taxation is one of the most important tools in addressing inequality.

Tax evasion and avoidance by multinationals further increases income inequality, as corporate equity mostly belongs directly or indirectly (e.g. through investment funds) to wealthy individuals who receive profit income through dividends and capital gains.

In the face of global outrage at the low or even close to zero corporate taxes paid by some of the world’s largest multinationals, last year, the OECD put forward proposals for a new international tax system to address the challenges of taxing multinational corporations in the digital era.

For the first time, the OECD proposal moved beyond the arm’s length principle considering taxing multinationals as global firms and distribute global profits between countries.