While most people are struggling to buy food and pay rent, a handful of billionaires have accumulated fortunes so vast they are almost impossible to comprehend. This is because the rules of the economy have been deliberately rewritten to favour wealth over work.

Across Australia, the UK, and the USA, the gap between the ultra-wealthy and everyone else has become a disaster for social cohesion.

Globally, the richest 1 percent own more wealth than 95 percent of humanity. In the UK, just 50 families hold more wealth than the bottom half of the population. In Australia, the richest 200 households have seen their wealth explode from 8 percent to 25 percent of GDP in just twenty years — that’s 200 households controlling $457,500,000,000 ($2,287,500,000 per household)!

This isn’t just about a few people having a lot of money to buy mansions and yachts. It’s about a system that concentrates disproportionate power with a tiny group of plutocrats who then completely skewed our society, economy and democracies, and now essentially hold a veto over the future.

Extreme wealth and wealth extraction from the immiserated majority to the billionaire-class is also the primary driver of right-wing extremism. Far from rejecting neoliberalism, the global far-right combines neoliberal market logic with hard borders and race science to justify inequality as a natural outcome of genetic or cultural differences.

We can see the consequences daily.

Hedge fund managers and neoliberal economics academics calling for corporate tax cuts, deregulation of air pollution and chemical water safety standards, essential services are privatised then raise their prices and degrade their quality, and monopoly supermarket chains engage Palantir to spy on customers.

With such extreme, toxic wealth inequality, it is beyond time for wealth taxes.

The revenue myth

Critics often focus on how much money a wealth tax would raise, but that misses the point. A 2 percent tax on those with over $5 million in Australia could raise $41 billion annually. However, a wealth tax’s primary purpose isn’t to raise revenue for sovereign governments that can create money within the constraints of inflation.

The primary purpose of a wealth tax is to rebalance the economic scales, challenges the dominant power and privilege of the plutonomy, and protect our democracy. It sends a clear message: the ultra-wealthy’s excessive power needs to be curbed in order to preserve our society and habitable climate.

Debunking the scare campaigns

Whenever a wealth tax is proposed, the same tired scare campaigns are rolled out.

The most common is the threat of “capital flight”. This is the threat that the ultra-wealthy will flee to tax havens. But history shows this is a hollow threat. In Spain, after a “solidarity tax” on large fortunes was introduced, the predicted exodus of the rich never happened:

What is clear is that, two years on, a predicted exodus of the rich, trumpeted in endless alarmist headlines, has not materialised. Forbes counted 26 Spanish billionaires in 2021. This year, it lists 34, with a combined net worth comfortably over $200bn.

This is because most ultra-wealth comes from ownership of real, physical things: land, public infrastructure, shares in listed companies with businesses that make or sell real things. A billionaire can’t send their mines to the Cayman Islands and a hedge fund can’t ship a toll-road offshore. The ultra-rich and their businesses rely on the rule of law, courts and civil societies in the countries where they live. They cannot simply “detach” their wealth from the societies that created it.

Similarly, the claim that taxing wealth creates “economic disincentives” is a fantasy. In Australia, wages are taxed at an average of 24 percent, while capital gains, the primary source of wealth for the rich, are taxed at an effective rate of just 1.9 percent.

If anything, our current system punishes work and rewards speculation. Unearned profits from mere ownership of property, land or shares (“wealth hoarding”) is not based on added value or genuine economic activities and should not be incentivised.

In Australia, for example, the accumulation of wealth has largely detached from productive effort. Between 1990 and 2023, 90 percent of the increase in household net worth came from capital gains (passive asset appreciation), while only 10 percent came from savings out of income (active work). Increasingly, as Thomas Piketty pointed out, wealth is being passed down generations via inheritance, creating a new dynastic ultra-wealthy elite — something even Republican politician Mitt Romney recently conceded.

Capital gains and its tax treatment worsens this and creates a perverse incentive for people (and commercial banks) to focus on unproductive, socially destructive financial gambling based on ownership.

The spending of billionaires also crowds out socially useful, productive investment. For example, builders prioritise building yet more luxury apartments for the ultra-wealthy to buy instead of affordable or public housing.

Opponents of wealth taxes also hide behind the “administrative complexity” of valuing assets like property, priceless art, or private companies. This is an utterly unserious objection.

We already require banks to disclose interest to tax offices, and the ultra-wealthy invariably insure their assets. Insurance companies and banks could easily disclose the value of insured assets for the ultra-wealthy to enable taxation. Any technical challenges in valuation are manageable with robust solutions. After all, borrowing using the valuations of their assets is how billionaires avoid paying income tax.

When excessive wealth endangers the very fabric of our society, claiming it is “too hard” to count that wealth is a cowardly, bad-faith excuse to protect the status quo.

No one becomes a billionaire through hard work and graft. The fortunes of the ultra-wealthy are built on the labour of workers, generations of public investment, predatory and often illegal monopoly practices, and increasingly, inheritance.

Allowing a tiny elite to hoard unimaginable riches while public services to crumble is what is truly radical.

Ultimately, we face a choice that US supreme court justice Louis Brandeis expressed a century ago: We can have democracy in this country or we can have great wealth concentrated in the hands of a few, but we cannot have both.

The billionaires have made their choice. Now, we must make ours.