Wealth and income have been extremely unequally distributed for over 100 years (see World Inequality Report 2022): The world's richest 10% own 75% of the world's total wealth (on average 550,000 euros per person), while the poorest 50% even own 2% of the total assets (on average 2,900 euros per person). The 1% richest even own 38% of the total assets (on average 2.8 million euros per person). The 2,640 billionaires worldwide in 2023 according to the Forbes Billionaires List, together held approximately $12.2 trillion in assets. They owned more than twice as much as the poorer half of the world's population (about 3.5 billion people) put together.
These extremely large fortunes and incomes of individuals (millionaires) cannot have been earned through merit and must be returned to those who have little.
In 2021 there was private wealth of US$ 473 trillion worldwide (see CS 2022). The world's approximately 63 million millionaires (about 1% of the world's population) own US$ 235 trillion. At the end of 2022, Bernard Arnault was the richest person in the world with a fortune of $233 billion.
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If you dispossess all millionaires down to US$ 1 million and distribute the money equally to the 3.5 billion adult poor (those with less than US$2,700 in assets), each person will receive a one-off payment of US$ 49,100. Alternatively, if you impose a wealth tax on the millionaires at an appropriate rate of, for example, 6.5% (6.5% is the expected annual return on assets including inflation, see WIR 2022, page 90) and pay out the money to the 3.5 billion poor, each person would receive 4,360 US dollars per year. Over the lifetime of a person (currently around 70 years on average), this is US$ 305,000 (including compound interest effects of e.g. 2% per year, this sum is US$ 667,000), which the millionaires withhold/steal from every person. In most countries this sum is huge. Each person can then, for example, buy an apartment with water and electricity and has escaped poverty.
In Germany, private wealth amounted to 16.4 trillion euros in 2022 (see CS 2022, page 50: average wealth of each adult: US$257,000). The richest 1% of adults (approximately 700,000 people) own approximately 34% of this (see Bach, Thiemann, Zucco 2019, page 1247), or approximately 5.58 trillion euros. If the richest 1% were expropriated down to 1 million euros and the money were distributed equally among the 35 million adult low-wealth earners (those with assets of less than 4,000 euros), each person would receive a one-time payment of 139,000 euros. Alternatively, if the richest 1% were to be subjected to a wealth tax of 7% (7% is the expected annual return on assets including inflation, see Bundesbank 2022, page 34) with an allowance of 1 million euros, this would result in tax revenue of 342 billion euros per year. If this sum were paid out to the 35 million adult low-wealth earners, each person would receive 9,760 euros per year. Over a person's lifetime (currently an average of around 80 years), this amounts to 780,000 euros (including compound interest effects of, for example, 2% per year, this amount is 1,929,000 euros), which the millionaires are thus withholding/stealing from each person.
In 2021, global income (after social security contributions and before taxes, full-time and part-time employees) was around 86 trillion euros (see WIR 2022). The low-income (half of the adult population) have a share of 8.5% of global income, or 7.3 trillion euros. This corresponds to a monthly salary of 230 euros per person. The highest earners (10% of the adult population) have a 52% share of global income, i.e. 44.7 trillion euros. This corresponds to a monthly salary of 7,300 euros per person. The top earners (1% of the adult population) even have a monthly wage of 26,800 euros per person.
The middle income (equal distribution of total income) is 1,375 euros per month.
These extreme and unfair income inequalities must be eliminated. One possibility is to limit income linearly between a minimum and maximum income. For example, if you set the minimum income at 80% of middle income and the maximum income at 120% of middle income, the minimum income would be 1,100 euros per month and the maximum income would be 1,650 euros per month. The low-wage earners could thus escape their poverty.
In Germany (see WIR 2022), the low-income (half of the adult population) have a share of 19% of all income. This corresponds to a monthly salary of 1,270 euros per person. The highest earners (10% of the adult population) have a 37% share of all income. This corresponds to a monthly salary of 12,300 euros per person. The top earners (1% of the adult population) even have a monthly wage of 42,500 euros per person.
80% of the lower-income adult population derives their income mainly (over 90%) from wage labor, while the top 1% with the highest income derives their income mainly (over 70%) from profit and capital income (see IncomeWiki 2023)
The middle income (equal distribution of total income) is 3,325 euros per month.
If you set the minimum income at 80% of middle income and the maximum income at 120% of middle income, the minimum income would be 2,660 euros per month and the maximum income would be 3,990 euros per month. The low-wage sector would thus be dissolved.
Another means of ensuring a minimum income is a basic income (see www.grundeinkommen.de for the various models). Depending on the model, it provides a minimum income of approximately 1,200-1,500 euros per month. The cost is estimated at approximately 1 trillion euros, which will be financed through various taxes (such as increases in income tax, value-added tax, and other taxes).
Thomas Piketty is the world's leading scientist in the field of inequality research. He became known worldwide primarily for his work Capital in the 21st century (circulation over 2.5 million ., translated into 40 languages). Together with more than 100 scientists, he has been building up an extensive database on global inequality since 2011, the World Inequality Database. The World Inequality Report 2022 was recently derived from this.
Piketty has also studied inequality historically: It has existed worldwide for over 100 years: 50% of people own almost nothing (just 2% of global wealth) meanwhile the richest 1% own more than 30% (see WIR 2022, p. 93).
Piketty proposes a progressive wealth, inheritance and income tax as the main instrument to overcome inequality:
Image taken from https://awblog.at/piketty-2-0-ideen-verteilungsgerechtigkeit/
So if someone owns 5 times the average wealth, their inheritance tax is 50% and their annual wealth tax is 2% of their wealth.
Piketty proposes to distribute the revenue from these taxes to the 50% who have few:
"The closest solution (...) would be an inheritance system whereby the entire population could enjoy a minimal inheritance. Such a minimal inheritance could be around (...) 60% of the average wealth per adult (i.e. 120,000 euros with an average of 200,000 euros as is currently the case in France) and be paid out to everyone at the age of 25 (from Piketty 2022, p. 176)."
Piketty proposes a welfare state based on the principles of democratic, self-governing and decentralized socialism to overcome capitalist power relations:
In addition to these demands by Piketty, there are further conclusions and implementation options for the democratization of companies:
Companies are currently predominantly owned by the richest 10%. Through an equal redistribution of wealth and income (see above), ownership of companies is automatically distributed more evenly. Previously, the richest 10% were in control of the companies, but after redistribution, all sections of the population are equal. Furthermore, after a redistribution, the profits of the companies are more evenly distributed to everyone.
Everyone works according to their skills, interests and needs. He chooses a job accordingly and applies for it in a company. If there are too many applicants, a random draw will be carried out. So everyone gets the same chance of a job. If you want, you can apply for several jobs. For example, someone works 5 hours a week in elderly care and 15 hours in web design. You can change jobs at any time.
Work tasks are carried out in a company in a democratic and professional manner. The project manager and the sub-project manager for a work task are democratically elected by the employees involved in the work task. These decide on the work organization within the work task. They can be re-elected at any time at the request of an employee. In addition, all employees work together as equals. In the work task, the central objective is not profit, but the technical solution of the task with the help of the competence of all employees.
Work is divided into more pleasant and more unpleasant work in a points system by means of regular surveys of everyone. In addition, work for which there are too few is valued higher and work for which there are too many is valued lower. This rating is then mapped to the level of income.
It is now a matter of politically implementing Piketty's groundbreaking results and proposals.