Weather phenomena are extreme. Fires are becoming megafires, as evidenced by the current situation in Western Canada. Periods of drought followed by uncontrollable floods are prolonged, jeopardizing harvests as is currently the case in southern Africa, where millions of people are food insecure. And other parts of the world are flooded, like Brazil recently, or hit by cyclones, like Bangladesh and India last week. Armed conflicts are raging, like the weather. And families lose everything.
Today, five billion people are poorer than in 2020. But billionaires have doubled their fortune compared to the start of this decade of crises. Across G20 countries, the top 1% of earners have seen their tax rates fall by around a third over recent decades, while their share of national income has increased by 45%.
Like the fortunes of the ultra-rich, multinationals are shattering profit records. Together, 148 of the world’s largest companies achieved 89% higher profits from 2021 to 2024 compared to the 2017-2020 average.
The shift initiated by the Government of Canada in its recent federal budget, with the taxation of great wealth, is an important step. With the modification of the Income Tax Act so that the taxation of capital gains of the richest individuals increases from 50% to 66%, the Chair in Taxation and Public Finance calculates that Canada will fetch 19, $4 billion in government revenue over the next five years. However, it remains to tax the exorbitant profits of large companies, including those in the oil and gas sector, which have escaped these tax revisions.
The roots of inequality
A new era of monopolistic power is reinforcing the extreme power of multinationals, allowing a few to control markets and set the terms of profit.
This upward trend in monopolies affects us all. Yet this extreme power is not inevitable. In 2023, the U.S. government filed a lawsuit against Amazon, alleging that the company had taken advantage of its monopoly power to “inflate prices, degrade quality, and stifle innovation for consumers and businesses.”
Corporate power is driven by the goal of increasing profits for already wealthy shareholders, which amplifies economic, gender and ethnic inequalities, and accelerates environmental degradation.
The 3 “Rs” of the fight against inequalities
Governments must show leadership to close the gap and radically narrow the gap between the super-rich and the rest of us, through the 3 “Rs”: Revitalize the State, Restrain Extreme Corporate Power, and Reinvent the business world.
First of all, a strong, dynamic and efficient state is the best protection against excessive corporate power. All governments should end the privatization of sectors such as education and health and prioritize public service provision for energy and transport.
Second, governments must curb excessive corporate power by breaking up monopolies and democratizing trade and patent rules. Laws can prevent companies from paying dividends to their wealthy shareholders until they pay decent wages and invest in reducing their carbon footprint. Radically increasing taxes on the super-rich and corporations is inevitable if we want to reduce inequality.
Competitive and profitable businesses should not be hampered by shareholder greed. If just 10% of American businesses were employee-owned, the poorest half of the population would be twice as rich. This is what we mean by reinventing the business world: that companies are owned by a large number of people and that the decisions taken reflect the challenges of society.
As the G20 Summit approaches in November in Rio, tax fairness will certainly be a central issue. Can we win back our democracies? We are losing the race towards an equitable and sustainable future, free from poverty and injustice. If this trend is not reversed, we are heading for disaster. We need a “new world order”, a redesigned and human-centered economic model.