What if we tax the super-rich to reduce climate injustice (and reduce poverty)?

According to a study by the World Inequality Lab, the richest 1% of the population alone produces more greenhouse gases than the poorest half of the planet.

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Everyone pollutes, but some pollute much more than others. This is evidenced by a report published this week by the World Inequality Lab. This research institute at the Paris School of Economics and the University of California at Berkeley has done extensive research on climate inequalities, taking into account global consumption of goods and services, as well as investment.

Specifically, the richest 10% of the world’s population accounts for almost half (48%) of greenhouse gas emissions. The poorest half participate in only 12% of these emissions. As for the richest 1%, it accounts for almost 17% of annual emissions.

The poorest bear the brunt of the costs of global warming

While historical disparities between countries remain significant (an American’s average carbon footprint remains about ten times that of an Indian’s), the report highlights that inequality is also widening within countries, across different income classes. The carbon footprint of the richest 10% in North America (the highest in the world, with 69 tons of CO2 equivalent per person per year) is almost six times that of the poorest 50% in this region (10 tons of CO2). ). In Europe, the gap is also significant: 29.4 tons for the richest 10%, 5 tons for the poorest 50%.

The carbon footprint must be reduced to 1.9 tons per person in 2050 to keep hope of limiting global warming to 1.5°C by the end of the century, the report notes.

However, while the wealthiest produce most greenhouse gas emissions, the poorest and least responsible remain the most affected by climate change; According to the World Inequality Lab, the poorest half of the world’s population is responsible for 75% of income losses associated with the effects of climate change.

Kill two birds with one stone

“Our report shows that there is a triple crisis of climate inequality—emission inequality, global warming losses, and the ability to act—and that global wealth is doing too little to solve the climate crisis,” the economist concluded for Le Monde. Lucas Chancel, co-director of the World Inequality Lab (along with his colleague Thomas Piketty and others). “The idea is not to blame the rich or justify the poor. It is a matter of better understanding which groups will be the winners and losers of the energy transition in order to speed it up.”

In their report, the authors call for a revision of global taxation, in particular by taxing the richest, in order to kill two birds with one stone: accelerate the fight against climate change and reduce poverty.

Two versions of the taxation of the “super-rich” are given. The “easiest” will only concern the richest 0.001%, with a 1.5% inheritance tax (a rate that will increase for the largest legacies). Enough to raise $295 billion a year, World Inequality Lab economists calculated.

The second proposed regime would be to tax assets with a net worth of $5 million (instead of $100 million, therefore). Then the richest 0.1% of the world’s population will suffer. What will bring a good jackpot: 1.1 trillion dollars. Combined with an air transport tax (which will raise between $132 billion and $392 billion), these new levies will bring globally closer to the financial needs of developing countries ($1,800 billion in 2030).

Freeing up the carbon budget for the poorest

According to the authors of the report, the idea that the fight against global warming in rich countries will have no weight (given the growth of the middle class in developing countries) is false. “This is a way to remove responsibility and guilt,” commented Lucas Chancel in Le Monde. Fighting poverty by allowing the world’s entire population to live on at least $3.20 (€2.95) a day would only increase emissions by 5%, according to the report.

To be a bit more ambitious ($5.50 a day, enough to improve the daily lives of 3 billion people), emissions would increase by 18%. Recall that this corresponds to the same order of magnitude as the emissions of the top 1%, or a third of the emissions of the top 10%. For the World Inequality Lab, “reducing the summit’s carbon footprint would thus free up the carbon budget to lift people out of poverty.”

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