Panos Tsakloglou: Taxing global wealth stumbles upon political will

Economy economytaxTop News Panos Tsakloglou: Taxing global wealth stumbles upon political will Spacex Listed On Nasdaq Market Relevant News Temperatures to reach 37°C with isolated mountain rain possible 13 September 2026 Panos Tsakloglou: Taxing global wealth stumbles upon political will 13 September 2026 Nicosia’s flood weak points exposed as authorities tackle decades-old drainage problems 13 September 2026 Xenia Tourki 13 September 2026 FacebookXWhatsAppEmailPrintViber The long-term dynamics of wealth accumulation continue to work in favour of those who already hold significant capital Global private wealth is growing at an impressive pace, but its distribution remains extremely unequal. While millions of households face high living costs and financial insecurity, the richest 10% of the world’s population holds roughly three-quarters of total wealth, while the poorest 50% is left with just 2%. This is an imbalance that shows up not only in economic indicators, but directly affects opportunity, social mobility and, ultimately, the functioning of democracy itself. The idea of taxing wealth remains appealing, Panos Tsakloglou, Professor at the Athens University of Economics and Business and member of the Monetary Policy Council of the Bank of Greece, tells Phileleftheros — though he adds that it is a difficult undertaking, one that requires global cooperation to succeed. “A minimum tax on billionaires is technically feasible. But to be effective, it needs coordination among a sufficiently large number of major economies, along with effective information-sharing. The main obstacle is political rather than technical.” The concentration of economic power, however, is not only a matter of social justice, Tsakloglou points out. When wealth buys privileged access to political power, to the shaping of public opinion and to decision-making centres, the consequences reach the very core of democracy. “The crucial question isn’t just how unequally wealth is distributed, but whether its concentration limits social mobility and equality of opportunity, and ultimately undermines the principle of citizens’ equal participation in the democratic process,” he says. — How is global private wealth distributed today, and how many hands is it concentrated in? When we talk about private wealth, we usually mean households’ net wealth: financial assets, property and other assets, minus liabilities. Unlike income, though, reliable and comparable long-term series on the level — and especially the distribution — of wealth exist for a relatively limited number of countries. The available data show two things. First, that over recent decades private wealth has grown much faster than income. In the US and Europe, for instance, households’ total wealth was roughly three times national income around 1970, whereas today it stands at around five to six times. Second, wealth remains extremely concentrated, and in several countries that concentration increased significantly after 1980 — far more so in the US than in Europe. There is, however, an important caveat. The usual wealth indicators don’t fully capture a very significant intangible asset: the present value of entitlements from public and other unfunded pension systems. This matters particularly in countries with mature pay-as-you-go pension systems, where accumulated pension rights are among the most significant assets many workers hold. Studies on countries such as Italy, Germany and the US show that when the present value of these entitlements is added to conventional assets, measured inequality in total wealth falls significantly. So wealth is indeed very unequally distributed, but the scale of that inequality depends heavily on exactly what we include in the definition of wealth. — Where is this wealth held? What explains the explosive accumulation of capital at a time when most people face heavy financial pressure? Do you agree that global private wealth appears “immune” to crises? I don’t think I’d agree that private wealth — particularly the wealth of the very rich — is “immune” to crises. Their wealth consists to a large extent of shares and business holdings, whose valuations fluctuate considerably. That was clear during the global financial crisis, which peaked after the collapse of Lehman Brothers. But short-term fluctuations are one thing, and the long-term trend is another. For several decades now, returns on capital have on average been higher than the economy’s growth rate. At the same time, very wealthy households save a much larger share of their income and hold more diversified portfolios, with greater exposure to shares and business capital. By contrast, for most households the most significant asset is usually their home. There’s also another important asymmetry. In times of crisis, low- and middle-income households may be forced to cut their savings or even sell assets to maintain their consumption. The very wealthy face no such constraint — and can instead buy assets when prices have fallen. So despite occasional heavy losses, the long-term dynamics of wealth accumulation continue to work in favour of those who already hold significant capital. — Has this wealth been taxed? Part of the income from which wealth was generated has certainly been taxed. But that doesn’t mean the current value of that wealth has been taxed too. If, for example, the value of a business holding multiplies, the capital gain is usually not taxed at the shareholder’s level until they actually sell their stake. We should also bear in mind that from the 1980s, and for several decades afterwards, developed economies saw a strong trend of cutting taxes on both high incomes and capital. Tellingly, across OECD countries the average top personal income tax rate fell from around 66% in 1981 to around 42% three decades later. At the same time, the average corporate tax rate fell from around 47% in the early 1980s to around 24% today. That downward trend has, however, largely stalled in recent years. Finally, the very wealthy have far greater capacity to use specialised legal and tax advisory services to reduce their tax burden — often entirely legally. At the same time, a significant share of global financial wealth is held in offshore financial centres. That doesn’t necessarily mean it’s undeclared or untaxed. In fact, the international automatic exchange of banking information has significantly curbed offshore tax evasion. So the question of whether accumulated wealth “has been taxed” can’t be answered with a simple yes or no. — How unequally is private wealth distributed today, both between countries and within societies? Inequality in the distribution of wealth is very large, both between countries and within them. According to recent estimates from the World Inequality Report, the richest 10% of the world’s population holds roughly three-quarters of total wealth, while the poorest 50% holds just 2%. In fact, the richest 1% holds more than a third of global wealth. Concentration is very high across all regions of the world, though significantly higher in some than others. Two caveats are needed, though. First, as I mentioned earlier, conventional wealth measures usually don’t fully capture accumulated entitlements from public and other unfunded pension systems. Including them noticeably reduces measured inequality, particularly in countries with mature pay-as-you-go pension systems. Second, it isn’t accurate to say that wealth inequality is constantly widening everywhere — its trajectory varies considerably between countries and time periods. — What social and political consequences does the continued widening of inequality bring? The social and political consequences become particularly significant when large wealth inequality turns into inequality of opportunity. Family wealth affects children’s educational prospects, access to housing, the ability to finance a business venture, and more broadly the capacity to take risks. So a high concentration of wealth can limit social mobility and contribute to inequality being reproduced from one generation to the next. Equally serious is the risk of large economic power turning into political power. Very large fortunes provide the means to influence the political process in ways the average citizen cannot: through funding political activity, lobbying, financing organisations that shape public debate, and also through owning or controlling media outlets and digital platforms. That doesn’t mean every wealthy person uses their fortune to influence politics, nor that every such activity is improper. But when the concentration of economic power becomes so great that it creates deeply unequal access to decision-making and to shaping public opinion, it creates a genuine risk to equal political participation and to the functioning of democratic institutions. There are also indications that high levels of inequality are linked to lower social and institutional trust, although the direction of causality isn’t always easy to establish. That’s why the crucial question isn’t just how unequally wealth is distributed, but whether its concentration limits social mobility and equality of opportunity, and ultimately undermines the principle of citizens’ equal participation in the democratic process. Unclear how AI’s gains will be distributed — Several tech experts promise an era of “global abundance for all” thanks to artificial intelligence (AI). As an economist, do you believe AI will democratise wealth, or create a new, even bigger gap between those who own the technology and those replaced by it? It’s far too early to know the answer. AI has the potential to dramatically boost productivity, create new products and services, and ultimately improve living standards significantly. But that doesn’t tell us how its benefits will be distributed. The impact on inequality will depend heavily on whether AI mainly acts as a substitute or a complement to human labour. In the latter case, it could significantly boost the productivity and pay of many workers. In the former, the upheaval in the labour market could be much greater. The IMF estimates that around 40% of jobs worldwide are exposed to AI, with the share significantly higher in advanced economies. That doesn’t mean, of course, that all these workers will end up unemployed. Historical experience shows that technological revolutions destroy jobs but also create new ones, often in different sectors and requiring different skills. The crucial question is how smooth and fast this transition will be. There’s also the capital side of the equation. If a large share of productivity gains translates into higher returns on capital, then — given the already very unequal distribution of wealth — AI could initially deepen inequality further. Still, historical experience gives us reason not to simply project the present situation into the future. In the early stages of major technological shifts, pioneers often enjoy very high profits thanks to their technological head start and initially limited competitive pressure. But as the technology spreads, new competitors enter and its cost falls, those excess profits tend to shrink. I think something similar is likely with AI too, although the very large economies of scale that characterise the sector may slow that process down. So I don’t see either “global abundance for all” or an inevitable surge in inequality as a foregone conclusion. AI can create enormous new wealth. How widely its benefits spread will depend on how fast the technology diffuses, on market competition, on how workers’ skills adapt, and ultimately on the institutions and policies that accompany this major technological shift. — The debate over a global minimum tax on billionaires keeps resurfacing. Is it a realistic, workable solution, or will it simply drive capital flight to tax havens? The idea is certainly appealing. There are, for example, proposals for a minimum tax of around 2% on billionaires’ wealth, estimated to raise more than $200 billion a year globally. The core problem, though, is not so much technical as political: it requires a high degree of international cooperation. If one country acts alone, it creates strong incentives to shift tax residency or assets to countries with a more favourable tax regime. Empirical research confirms that the very wealthy do indeed respond to tax differences by moving between countries. But these effects aren’t large enough to necessarily make taxing wealth ineffective. Exchange of tax information, rules on shifting tax residency, and tax authorities’ ability to identify the true ownership of assets all play a very important role too. The recent experience of the global minimum corporate tax is instructive. Under the OECD/G20 framework, a minimum effective tax rate of 15% on profits was agreed for large multinational companies, and the system is already being applied in many countries. The difficulties in implementing it, and the special treatment of the US, show the limits of international cooperation — but not its failure. So a minimum tax on billionaires is technically feasible. But to be effective, it needs coordination among a sufficiently large number of major economies, along with effective information-sharing. The main obstacle is political rather than technical. Subscribe to our Newsletter Latest News Temperatures to reach 37°C with isolated mountain rain possible Nicosia’s flood weak points exposed as authorities tackle decades-old drainage problems Parents arrested after child dies in sixth-floor fall in Nicosia Four-year-old boy dies after fall from building in Engomi €13,500 fine issued in Larnaca poaching case Limassol Police arrest couples from Israel and Palestine after finding cocaine in paint tins (photos) Minor seriously injured after fall from balcony in Engomi Follow en.philenews on Google News and be the first to know all the news about Cyprus and the world.