The world’s wealthiest could be subjected to higher tax rates as governments scramble to fund spending and repair their economies amid the coronavirus crisis, an economist has predicted. Speaking to CNBC’s “Street Signs Europe” on Monday, Roger Bootle, chairman of Capital Economics, said he was concerned that some governments — including Britain’s — would assume tax rates must go up in order to mitigate the impacts of the pandemic.
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The idea of introducing or increasing tax rates for society’s wealthiest has been floated by economists as the long-term impact of the Covid-19 pandemic becomes more apparent.
According to the International Monetary Fund, the world is set for the deepest recession since the 1930s, with the global economy expected to contract by 3% in 2020.
In a paper published last month, the IMF suggested governments should consider increasing taxes on income, property and wealth through a so-called “solidarity surcharge” as a way of funding programs to protect their economies.
Meanwhile, in an April article for the New York Times, Daniel Markovits, a law professor at Yale and author of “The Meritocracy Trap,” said a 5% tax on the wealthiest 5% of American households could raise up to $2 trillion.
“Our extraordinary battle against the pandemic should draw on the immense reserves that the most privileged among us have accumulated over decades of abundance,” he said.
“Government borrowing is tempting because debt is now so cheap. But borrowing will in the end burden the young, who are now suffering their second economic calamity in a decade. Instead, the relief effort should be funded through a one-time wealth tax imposed on the richest Americans, whose wealth has exploded alongside rising inequality.”
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Taxing wealth was a core policy in Senator Elizabeth Warren’s campaign for the Democratic candidacy. Under Warren’s proposal, net worth between $50 million and $1 billion would have been subject to a levy of 2%, while wealth above $1 billion would have been taxed at 6%.
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