The millionaires volunteering for higher taxes

Rich people can be generous philanthropists but they don’t often volunteer to pay higher taxes.

However, informal groups of multimillionaires in the US and Europe are urging governments on both sides of the Atlantic to increase taxes on the wealthiest, with one association gleefully speaking of being “proud traitors to their class”.

They warn that the Covid-19 pandemic has created huge public debts and brutally deepened social inequalities that were already entrenched before the crisis struck.

“We live in a society that’s just not going in the right direction,” says Graham Hobson, a British entrepreneur, who earned his fortune after founding PhotoBox, an online photo printing company, in 2000 and selling it to a private equity firm in 2016.

“That’s become very obvious during the pandemic. There’s a whole tier of people that are considered essential workers who don’t get paid well or valued. And the gap between them and the wealthiest in society is only going to get wider.”

Liesel Pritzker Simmons, who was born into one of the US’s wealthiest families, says: “People like us have been undertaxed. Trickle-down economics has not worked. Actually, it’s done the opposite.”

Pritzker Simmons, along with her husband Ian Simmons, runs Blue Haven Initiative, an impact-investing-focused family office. She believes the US tax system is “broken” — ravaged by “decades of neoliberal economics, decades of big money in politics and corporations hoodwinking our policymakers about how they should be taxed”.

“It’s very likely the US will have a wealth tax in the future, the question is when,” says Ian Simmons, who is a big fan of the wealth tax proposed by leading Democratic Senator Elizabeth Warren (pictured top). If passed, this would levy an annual wealth tax of 2 per cent on American citizens with more than $50m, plus an extra 1 per cent on every dollar of wealth over $1bn.

Pandemic profits

The pandemic has starkly shown up the wealth differences between the haves and the have-nots. The total wealth of the world’s billionaires shot up from $8.04tn in March 2020 to $12.39tn last month — a 54 per cent rise, according to research by the Institute for Policy Studies, a progressive American think-tank, using data from Forbes, Bloomberg, and Wealth-X.

In contrast, the pandemic caused the global economy to shrink 3.5 per cent in 2020, IMF figures showed, causing huge job losses and pay cuts. While richer households saw their savings rise last year, poorer homes depleted theirs or fell into debt.

Vitor Gaspar, the IMF’s head of fiscal affairs, recently argued that the risk to “social cohesion” caused by the Covid-19 disruption means higher earners and corporations should pay more tax in a gesture of solidarity.

Hobson, Pritzker Simmons and Simmons agree. They are all members of a movement of wealthy people calling for increased taxes on the rich. The campaign operates under different banners and includes a US operation called Patriotic Millionaires. Pritzker Simmons and Simmons are members, as are Disney heir Abigail Disney and Morris Pearl, a former executive at the BlackRock asset manager. A British arm of the Patriotic Millionaires currently has six members, including Hobson.

Another group, Millionaires for Humanity, set up by Djaffar Shalchi, an Iranian-born Danish entrepreneur, has also attracted several backers. He is a real estate professional who founded and heads Arca Holding, a construction and property group.

The millionaires argue that unless governments increase wealth taxes, the legacy of the pandemic will be a greater concentration of wealth and power. The network recently pressed G20 finance leaders meeting at this month’s IMF and…