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	Major tax cuts for the rich since the 1980s have increased income inequality by London School of Economics and Political Science United Kingdom   Dec. 2020   Major tax cuts for the rich since the 1980s have increased income inequality.   Major reforms reducing taxes on the rich lead to higher income inequality but do not have any significant effect on economic growth or unemployment, according to new research by LSE and King’s College London.   Researchers say governments seeking to restore public finances following the COVID-19 crisis should therefore not be concerned about the economic consequences of higher taxes on the rich.   The paper, published by LSE’s International Inequalities Institute, uses data from 18 OECD countries, including the UK and the US, over the last five decades. The Economic Consequences of Major Tax Cuts for the Rich, by David Hope and Julian Limberg, shows that the last 50 years were a period of falling taxes on the rich in the advanced economies. Major tax cuts were spread across countries and throughout the observation period but were particularly clustered in the late 1980s.   It states: “Our results show that…major tax cuts for the rich increase the top 1% share of pre-tax national income in the years following the reform. The magnitude of the effect is sizeable; on average, each major reform leads to a rise in top 1% share of pre-tax national income of 0.8 percentage points. The results also show that economic performance, as measured by real GDP per capita and the unemployment rate, is not significantly affected by major tax cuts for the rich. The estimated effects for these variables are statistically indistinguishable from zero.”   It continues: “Our findings on the effects of growth and unemployment provide evidence against supply side theories that suggest lower taxes on the rich will induce labour supply responses from high-income individuals (more hours of work, more effort etc.) that boost economic activity. They are, in fact, more in line with recent empirical research showing that income tax holidays and windfall gains do not lead individuals to significantly alter the amount they work.”   The authors conclude: “Our results have important implications for current debates around the economic consequences of taxing the rich, as they provide causal evidence that supports the growing pool of evidence from correlational studies that cutting taxes on the rich increases top income shares, but has little effect on economic performance.”   Dr Hope, Visiting Fellow at LSE’s International Inequalities Institute and Lecturer in Political Economy at King’s College London, said: “Our research shows that the economic case for keeping taxes on the rich low is weak. Major tax cuts for the rich since the 1980s have increased income inequality, with all the problems that brings, without any offsetting gains in economic performance.”   Dr Limberg, Lecturer in Public Policy at King’s College London, said: “Our results might be welcome news for governments as they seek to repair the public finances after the COVID-19 crisis, as they imply that they should not be unduly concerned about the economic consequences of higher taxes on the rich.”   The countries studied in the paper are Australia, Austria, Belgium, Canada, Germany, Denmark, Finland, France, Ireland, Italy, Japan, the Netherlands, Norway, New Zealand, Sweden, Switzerland, the United Kingdom, and the United States.   http://www.lse.ac.uk/News/Latest-news-from-LSE/2020/L-December/Tax-cuts-for-the-rich   Dec. 2020   A one-off wealth tax on millionaire couples paid at 1% a year for five years would raise £260 billion, according to the final report of the Wealth Tax Commission.   The Commission recommends that if the government chooses to raise taxes as part of its response to the Covid-19 crisis, it should implement a one-off wealth tax in preference to increasing taxes on work or spending.   The report follows intensive research by a team of over fifty international experts on tax policy and practice. The three Commissioners are academics from the London School of Economics and Political Science (LSE) and the University of Warwick, and a leading barrister with long experience of advising High Net Worth Individuals. Under the design recommended by the Commission, a one-off wealth tax would:   Be paid by any UK resident (including ‘non-doms’ and recent emigrants) with personal wealth above a set threshold. Include all assets such as main homes and pension pots, as well as business and financial wealth, but minus any debts such as mortgages. Be payable in instalments over five years.   The Commission concludes that a one-off wealth tax would be:   Fair. Wealth provides opportunity, security and spending power. Those with the most wealth have the ‘broadest shoulders’ to afford an additional contribution to society in times of crisis.   Efficient. Unlike taxes on work or spending, a one-off wealth tax would not discourage economic activity. The administrative costs would also be small as a proportion of the revenue raised.   Very difficult to avoid. A one-off wealth tax could not be avoided by emigrating or moving money offshore. In fact, if well designed, it would be very difficult to avoid the tax legally.   The report does not say when the tax should be implemented or recommend specific tax rates or thresholds but instead provides a range of options.   As two examples:   At a threshold of £1 million per household (assuming two individuals with £500,000 each) and a rate of 1% per year on wealth above the threshold, a one-off wealth tax would raise £260 billion over five years after administration costs. This is equivalent to raising VAT by 6p or the basic rate of income tax by 9p for the same period.   At a threshold of £4 million per household (assuming two individuals with £2 million each) and a rate of 1% per year on wealth above the threshold, a one-off wealth tax would raise £80 billion over five years after administration costs.   Alongside the report, the Wealth Tax Commission has launched an interactive website (taxsimulator.ukwealth.tax) that allows members of the public to model their own revenue-raising options, and see how much they would pay under different options.   Dr Arun Advani, Assistant Professor at the University of Warwick and Visiting Fellow at LSE's International Inequalities Institute, said: “We’re often told that the only way to raise serious tax revenue is from income tax, national insurance contributions, or VAT. This simply isn’t the case, so it is a political choice where to get the money from, if and when there are tax rises.”   Emma Chamberlain, barrister at Pump Court Tax Chambers and Visiting Professor in Practice at LSE's International Inequalities Institute, said: “People sometimes say the super-rich won’t pay. My experience is they are happy to pay, as long as the tax is simple to operate, affordable and they don’t feel they aren’t being singled out with penal rates. The trouble is that our current way of taxing the wealthy is far too complicated leading to avoidance and resentment. We need a better way forward.”   Dr Andy Summers, Associate Professor at LSE’s Department of Law and Associate Member of the International Inequalities Institute, said: “Our report provides the first serious look at proposals for a UK wealth tax in nearly half a century. A one-off wealth tax would work, raise significant revenue, and be fairer and more efficient than the alternatives.”   The final report of the Wealth Tax Commission, A wealth tax for the UK, by Dr Arun Advani (University of Warwick), Emma Chamberlain (barrister) and Dr Andy Summers (LSE) is published on the Wealth Tax Commission website: www.wealthtaxcommission.uk   ABOUT A ONE-OFF WEALTH TAX:   A one-off wealth tax is a tax on a person’s net wealth (all assets minus all debts) assessed at a single point in time, but payable over a number of years. The tax would be levied only on the amount of wealth that is above the threshold. One-off taxes have been used after major crises before, including in France, Germany and Japan after the Second World War and in Ireland after the Global Financial Crisis. At individual thresholds of £500,000, £1 million and £2 million a wealth tax would respectively cover 17%, 6%, and 1% of the adult population.   ABOUT THE WEALTH TAX COMMISSION:   The Wealth Tax Commission was founded in April 2020 to study whether a wealth tax for the UK would be desirable and deliverable. It commissioned a network of over fifty international experts on tax policy – including academics, policymakers and tax practitioners – to contribute evidence on this issue.   Contributors to the Commission included economists from Institute for Fiscal Studies, Resolution Foundation, Institute for Government and the OECD. Evidence was also received from tax practitioners and policymakers. The evidence that the Commissioners used to prepare their final report was published in October 2020 at www.wealthandpolicy.com, providing the largest repository of evidence on wealth taxes globally to date. It comprises half a million words across more than thirty papers, covering all aspects of wealth tax design – both principle and practice.   * Such a wealth tax could be implemented in countries worldwide.   http://www.lse.ac.uk/News/Latest-news-from-LSE/2020/L-December/Wealth-Commission-report http://www.ukwealth.tax/ http://www.lse.ac.uk/International-Inequalities/Research/Wealth-Elites-and-Tax-Justice http://bit.ly/35erHxJ http://inequality.org/great-divide/updates-billionaire-pandemic/ Visit the related web page
	COVID-19 could push millions into exploitation or slavery by Tomoya Obokata, Marcos Orellana Special rapporteur on contemporary forms of slavery   COVID-19 risks pushing millions of children, women and men into contemporary forms of slavery and other forms of exploitation unless governments act now to protect them, a UN human rights expert warned today.   “Historical levels of underemployment or unemployment, loss of livelihoods and uncertain economic perspectives are some of the complex consequences of the COVID-19 pandemic which have hit the most vulnerable hardest,” said Tomoya Obokata, special rapporteur on contemporary forms of slavery, as he presented his report to the 45th session of the Human Rights Council.   “Combined with weak safety nets and a dismantling of labour rights and social protection regulations in some countries, there is an acute risk that the poorest will be pushed into bonded labour, forced labour or other contemporary forms of slavery for survival, he said.   “States may see dismantling labour rights as a quick fix in light of increasing pressure on businesses as a consequence of the global economic recession,” Obokata said. “In the long term, however, these same States will pay a high price for removing people’s protection and dignity at work.”   He particularly called for accountability for businesses that exploit vulnerable workers producing, processing and providing medicine, medical equipment or Personal Protective Equipment (PPE) during the pandemic.   “Labour rights must be upheld and social protection ensured across all economic sectors,” he said. “States must ensure that in the context of the COVID-19 pandemic, no one is left behind and pushed into slavery-like practices.”   * The Special Rapporteur received multiple submissions raising concerns about the worsening situation of people who were already in situations of or at risk of contemporary forms of slavery before the outbreak. The experiences outlined in the report do not represent the full spectrum of the existing and evolving risks in the context of COVID-19. However, they provide information about trends that can inform further data-collection strategies and policy responses.   Informal workers:   The socioeconomic impact of the outbreak will be much harsher for the 2 billion people in the informal economy, constituting 62 per cent ofthe global workforce.   Their employment relationships are more easily broken and the safety nets available to them are fewer and weaker than those available to people in the formal economy.   Informal workers have no access to paid or sick leave entitlements, and are less protected by conventional social protection mechanisms and other forms of income support.   This concerns day labourers and temporary, non-contracted and own-account workers, including those in the so-called gig economy, promoted by digital labour platforms which employ, for example, taxi drivers and delivery workers.   Based on estimates by ILO, almost 1.6 billion informal economy workers have suffered massive damage to their capacity to earn a living due to lockdown measures and/or because they work in the hardest-hit sectors.   Furthermore, it is estimated that around 70 per cent of gig workers, many of whom quit their jobs due to a lack of demand or to protect their own safety, now have no income.   In the absence of alternative choices, informal economy workers are more likely than before the outbreak to accept abusive and exploitative employment and may become tricked into forced labour.   Those living in low-income and middle-income countries will be particularly affected, as informal employment represents 90 per cent of total employment in low-income countries and 67 per cent of total employment in middle-income countries.   More workers will incur debts in order to survive, a trend already observed among informal workers in India and employees of brick kiln factories in Pakistan. As a consequence, the risk of becoming trapped in debt bondage increases.   As more workers are likely to enter the informal economy due to loss of formal employment, these additional workers may compete fora shrinking piece of the informal economy with those already working there. Consequently, incomes and working conditions will gradually deteriorate.   http://www.wiego.org/informal-economy/statistics/statistical-picture   Women: Experiences from previous pandemics show that women often encounter the effects of such crises in different, more negative ways than men.   They tend to be overrepresented in low-paid jobs and the sectors most affected by the crisis. They include those employed in the garment industry, where large numbers from low- and middle-income countries are employed.   In light of the massive layoffs and lack of access to social protection mechanisms, they are in an extremely vulnerable situation.   ILO estimates that nearly three quarters of domestic workers around the world, predominantly women, are at risk of losing their jobs. Many have no access to social security or other safety nets.   In addition to bearing the brunt of massive job losses, women have been increasingly subjected to intimate partner violence and gender-based violence as a result of the lockdown measures.   Domestic violence may also become a push factor, increasing the vulnerability of victims to trafficking in persons and sexual exploitation.   Gender inequalities, discrimination based on race, caste group or other category and stereotypes about suitable forms of employment for women, combined with lack of labour protection laws and policies, perpetuate conditions leading to their exploitation. Furthermore, older women are less likely than men to receive a pension.   Young people aged between 15 and 24 years old will be among the most affected by the longer-term impact of the global recession and unemployment.   More than three quarters of young workers in 2019 were in informal jobs (most notably in Africa and South Asia), which render them vulnerable to economic crises and shocks. In addition to unprecedented job losses, the crisis has disrupted their education and training.   It is estimated that between 42 and 66 million children could fall into extreme poverty, adding to the 386 million children who were already in extreme poverty in 2019.   Temporary school closures, combined with pressure from the sudden loss of livelihoods, ood shortages and breakdown of community safety nets, may result in a permanent end to education for many children and a rise in child labour, including the worst forms of child labour.   Currently, there are 152 million children in work, 72 million of whom are in hazardouswork. ILO and the United Nations Children’s Fund (UNICEF) have warned that the crisis is expected to push millions more into child labour.   Indeed, an increasing number of children are reportedly working on farms and/or selling vegetables or fruit in the streets. Once they enter the workforce, it becomes difficult to incentivize them and their parents to return when schools reopen.   The rising number of children in street situations is yet another reflection of the pandemic. Reports from some countries indicate their increasing engagement in street begging due to loss of livelihoods, family violence or sexual exploitation. As a result,they are also at higher risk of being exposed to trafficking in persons. In Ghana and Nigeria, more children are seen in street situations and used in criminal activities, such as theft.   Furthermore, the Special Rapporteur is concerned about anecdotal information from Burkina Faso, Mali, Mozambique and the Niger suggesting that the combination of severe economic shocks, food shortages, school closures and deteriorating security situations creates fertile ground for the forced recruitment of children by armed groups.   Children from marginalized minority groups, child migrants, children with disabilities, children who are homeless or from single or child-headed households or disaster-affected areas are more at risk of child labour and other forms of exploitation and abuse.   * Access the full report: http://undocs.org/A/HRC/45/8 http://bit.ly/37sQkae   http://www.undp.org/publications/corruption-and-contemporary-forms-slavery-examining-relationships-and-addressing   COVID-19 exposure is exposure to hazardous substances, writes Marcos Orellana - Special Rapporteur on human rights and hazardous substances and wastes   "The COVID-19 pandemic serves as a microscope of existing patterns of vulnerability, inequality and discrimination," said Marcos Orellana, United Nations Special Rapporteur on human rights and hazardous substances and wastes. "Environmental degradation, climate change, and land use changes are key factors in the emergence of COVID-19."   Orellana, who is new to the mandate, made his statement in the presentation of a thematic report during the Human Rights Council. The report, by his predecessor Baskut Tuncak, looks at how States' duties to prevent exposure to toxins to their citizens extends to exposure to a virus like COVID-19.   "Everyone has a right to be protected from exposure to hazardous substances and environmental pollution," he said. "Exposure to COVID-19 is no exception. Every human being is essential."   The report documents how States' duty to prevent exposure to viruses, like COVID-19, is underpinned by national and international recognition of the rights to life, bodily integrity, safe and healthy working conditions and a healthy environment, among others. The report also highlights collective failure to stop the virus from turning into the catastrophic pandemic it is today.   "A pandemic of this magnitude was preventable," the report states. "The failure from heads of governments place economic or political interests before national health concerns."   Orellana said that while there was some good practice including preventative measures, and access to health for all, numerous States created situations where the most marginalized and vulnerable communities had the greatest risk of death from COVID-19.   "States allowed exposure among populations in the face of unquestionable danger," he told the Council. "Some States even went as far as to silence doctors, scientists and other activists who were warning about the spread and proportion of the pandemic."   The pandemic has also brought into sharp relief just how linked we all are, Orellana said. A weakness in any country is a threat to all.   "The COVID-19 crisis should reinforce the fact that our interconnected world requires global-level crisis management, multilateralism and strong international cooperation and solidarity," Orellana said.   http://www.ohchr.org/EN/NewsEvents/Pages/covid-exposure.aspx http://www.ohchr.org/EN/Issues/Environment/ToxicWastes/Pages/Annual.aspx Visit the related web page
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