Fair distribution of wealth
There is no shortage of money for building a more sustainable society. The main problem is how the existing wealth is distributed and allocated, with huge inequalities and unsustainable investment decisions. As a first step to reorienting the economy we advocate for a minimum tax on all companies doing business in Belgium, with higher rates for companies with more environmentally and socially detrimental impacts, anywhere in the world. We also advocate for a progressive tax on total revenues from labor and capital. This will help reduce and limit excessive accumulation and concentration of wealth. And this will generate initial funding for improving and expanding welfare services, while reducing the oversized ecological footprints of the weathliest.
Guaranteed basic services, a meaningful job guarantee, green investments: the transformation to an economy that provides for everyone's needs within planetary boundaries will require governments to spend significant large amounts of money. There is, however, no shortage of money. What lacks, is a fair distribution of wealth.
As a first step to reorienting the economy we advocate for a well-functioning minimum tax on companies. The tax should not just be applied to Belgian companies as is the case at present, but to all companies — including foreign multinationals — doing business in our country. Moreover, we favor a higher tariff proportional to the environmentally and socially detrimental impacts of a company’s activities, not just on the Belgian territory but across the globe.
Concerning income tax, the highest rate in our country is currently 50%. This rate applies as of a yearly income of €41.360. In the second half of the 20th century, many Western countries applied significantly higher rates. Post World War II, the United States implemented a maximum income tax rate of 91%. Also in Belgium, tax rates have been significantly higher, especially in the 1960s, 70s and 80s. A rate tending to 80% was applied for the top income range. Recent history shows that a more progressive tax system is possible. That is what we advocate for today. Exact rates should be the subject of a democratic debate. In his book Genoeg voor Iedereen, ecological economist Jonas Van Der Slycken for example proposes the implementation of additional tariffs of 60% (for the top 5% highest incomes, i.e. as of €60.000 yearly taxable income), 70% (as of €85.000), 80% (for the top 1%, i.e. as of €110.00), 90% (for the top 0,5%, i.e. as of €150.000) and even 100% (as of €1 million). In this proposal, a yearly taxable income of 1 million euro would still result in a monthly income over €12.000 per month, which is still tenfold the living wage.
In addition, we favor the principle that every kind of revenue should be taken into account for the calculation of this more progressive tax system, whether they arise from labor or from capital. Revenues from capital include for example rent collected by a landlord, or the dividends received by company shareholders. There is no justification for such forms of income to benefit from a special status. In the EU, the richest 10% has an average carbon footprint of 24 tons of CO2 per year, compared to 1.5 tons for the 10% lowest incomes. A significantly more progressive taxation is therefore not only a matter of social justice and of generating means for governments to start making necessary social and ecological investments. These taxes will also help curtailing the oversized ecological footprints of the wealthier parts of the population.
This explainer is not necessarily endorsed by all coalition partners
Further reading
Jonas Van Der Slycken, 2023, Genoeg voor iedereen. Standaard uitgeverij.