We all know what a billionaire is, but you may also know the word oligarch, someone rich enough to have a seat at the table, and sometimes even a hand on the pen. You might know the word from the famous Russian oligarchs; the word became shorthand for fortunes built fast in the chaotic Russian privatizations of the 1990s and then how they wired into politics (Investopedia, 2022).
In the West, we don’t like the word ‘oligarch’, even when the outcome looks rahter familiar; money bending politics. We just call it ‘lobbying,’ ‘donations,’ or ‘the market,’ and pretend it’s a different species.
That discomfort is imoportant, because it points to a real issue; can democratic states keep the rich from turning into a durable political power? And that brings us to the even harder question, whether governments can politically and administratively stop extreme fortunes from endlessly re-forming in an open global economy.
The truth is that broad “wealth taxes” have largely disappeared in many rich countries. The OECD reports that the number of member countries with a wealth tax fell from 12 in 1990 to 4 in 2017 (OECD, 2018). Governments cited several reasons:
“these taxes could be costly and complex to run,”
“hard to enforce well,”
“vulnerable to avoidance” or
“capital moving abroad,”
In the United Kingdom, an important moment for taxing the rich came with the 1909 People’s Budget, which raised taxes on high incomes, including an additional “super tax” on the wealthiest earners. The goal was to fund new social programs, such as old-age pensions. Over time, this helped establish the idea that higher taxes on the wealthy could support public services and expand the welfare state (UK Parliament, n.d.).
A century later, the global financial crisis of 2008 reignited public debate about inequality. The Occupy Wall Street movement gave this frustration a simple and powerful message: “We are the 99 percent.” The slogan highlighted how wealth and power had become concentrated in the hands of a very small elite (Stewart, 2019).
This discourse laid the groundwork for today’s proposals, such as minimum taxes on bilionares, renewed wealth taxes, and temporary “solidarity” or windfall taxes. While the specific policies differ from country to country, they share the common aim of addressing extreme concentration of wealth in the name of fairness and social stability (World Inequality Lab, 2025a).
The strongest case for “tax the rich” begins with the scale of concentration.
In 2025, the bottom 50% of the world population receives ~8% of global income and owns ~2% of global personal wealth, while the top 10% receives ~53% of income and owns ~75% of wealth. This difference between income concentration and wealth concentration is stunning. Wealth is the stock that generates future income and political leverage through compounding and asset control (World Inequality Lab, 2025b).
The extreme tail is stark, the top 0.001% (≈56,000 adults) holds about three times more wealth than the bottom 50% combined. The top 0.001% share rose from ~3.8% in 1995 to ~6.1% in 2025, while the bottom 50% remained around ~2% since the early 2000s (World Inequality Lab, 2025b).
Another argument in the debate is that wealthy individuals may pay lower effective tax than people who are upper-middle class. This happens because much of their wealth grows through assets, such as company shares, that increase in value but are not taxed unless they are sold. These gains, known as “unrealised capital gains,” often fall outside standard income tax systems (World Inequality Lab, 2025b).
The World Inequality Report finds that in several countries, income tax rates generally rise as income increases, but then drop at the very top, particularly for billionares (World Inequality Lab, 2025b). Therefore, tax systems can become less progressive at the highest levels of wealth.
If people believe that extreme wealth can legally avoid the spirit of progressive taxation, trust in the tax system can erode. Over time, it can also undermine confidence in the state itself. Citizens may begin to feel that the rules apply differently depending on wealth, creating a feeling of unfairness.
When that perception spreads, it can weaken democratic legitimacy and fuel an “us versus them” dynamic between taxpayers and economic elites. In such contexts, the questions turns complex, as a test of whether democratic institutions treat citizens equally under the law.
Probably, the most important point concerns political influence. Research also shows that political donations are often highly concentrated among the richest groups. When wealth is concentrated, political voice can become concentrated as well, through campaign donations, lobbying power, and influence over public agendas (World Inequality Lab, 2025b).
While political systems differ across countries, the pattern is similar, extreme wealth can translate into disproportionate political influence. This helps explain why proposals to tax the very rich, even when popular with the public, often encounter strong political resistance (World Inequality Lab, 2025b).
Bernie Sanders Responds to Criticism of his Socialist Policies (minute 7 onwards)
Whether we should aim for a world without the ultra-rich depends on what we believe they stand for.
There is a wide range of proposals that we can group in a spectrum:
- “Hard” approaches: making extreme fortunes illegal or effectively impossible through strict wealth caps or very high, confiscatory tax rates.
- “Soft” approaches: keeping bilionares legal, but designing taxes that very large fortunes are unlikely to survive unchanged for decades, especially across generations.
One argument for a targeted wealth tax on the very richest follows this “soft” approach; it does not ban extreme fortunes outright, but it makes them harder to maintain over time by gradually pulling them down toward an upper limit. The International Monetary Fund has highlighted this logic, noting that very high wealth concentration can be linked to rent-seeking, outsized gains from market power or privileged access rather than genuine economic productivity, and to disproportionate influence over how economic and political rules are written and enforced (International Monetary Fund, 2024).
Family dinner
Let’s be imaginative to review this better… you’re around the table with your uncle for Christmas. He has just finished explaining again why Bitcoin will save humanity. He also gestures at his designer watch like it’s a philosophical statement, and casually insists that wealth “belongs in the hands of people who earn it.”
You take a deep breath, reach for that wonderful looking salad, and realise this is going to be one of those holiday conversations.
Uncle: “Higher taxes for the rich? For what, so politicians can waste it? Europe must stay competitive. Cut red tape, let businesses breathe, and stop punishing people who create jobs.”
You:“I get the frustration. I don’t want to punish success. It’s about what happens when money becomes power. At a certain level, wealth buys access… the lobbyists, the influence over the rules… and it feels like there are two systems: one for everyone else, and one for the wealthy. That’s why people say ‘tax the rich’, because democracy shouldn’t feel like it’s for sale.”
Uncle: “But they invest, they create jobs. Isn’t that the whole point?”
You: “Sometimes, yes, innovation and risk-taking can be incentivized by wealth… but the issue is that a lot of that wealth grows in assets that aren’t taxed like our wages, and it can be moved around easily. So you get this situation in which wage earners can’t escape the tax system, but big wealth can bend it at will. That’s why some people don’t trust our system.”
Uncle: “So basically you want to punish success.”
You almost choke on the salad, and continue: “I wouldn’t say punish, I want to rebalance access to it. Wouldn’t you want the richest to contribute more… because they can? For some reason, they worry that higher taxes can backfire… less investment…. rich people leaving. So I would say the question is not if ‘tax them or not’, but rather it’s how to tax in a way that’s fair and doesn’t hurt the economy, like it does now.”
Uncle: “How does it hurt the economy?”
At this point, you don’t care about the salad anymore. “Because we’re basically choosing to fund society mainly off salaries while a lot of wealth escapes the safety net. I read a while ago in Marc’s blog that a modest tax on wealthy people with over $100 million could raise hundreds of billions a year globally. That’s real money for schools, hospitals, and infrastructure – without us having to pay more.”
By the time dessert arrives, you hope your uncle realised that you haven’t been arguing about tax rates at all; you’ve been arguing about democratizing the economy.
A lot of “tax the rich” reforms fail not because the tax rate on paper is too low, but because the amount wealthy people actually end up paying becomes much smaller once you add exemptions, tricky valuation rules, and legal ways to avoid the tax.
Spain is a good example. After Spain brought back its wealth tax in 2011, researchers found that many wealthy taxpayers didn’t pay the established rate (Mas-Montserrat et al., 2025). They rearranged their finances so the tax applied to a smaller base of their wealth:
- they shifted wealth into exempt assets (especially business-related exemptions), and
- they used a legal “tax shield” that limits how much wealth tax you pay when combined with income tax.
A study estimated that when the average wealth-tax rate increases by 0.1 percentage points (for example, from 0.5% to 0.6%), taxable wealth falls by about 3.2% over four years because they reclassify and repackage wealth into forms that are taxed less or not at all (Mas-Montserrat et al., 2025).
Those legal avoidance channels were so large that the authors estimate they produced a 2012–2015 revenue loss about 2.75 times the wealth-tax revenue Spain expected in 2011. Essentially, the law said one number, but the system collected far less because the effective tax base and liability were engineered downward (Mas-Montserrat et al., 2025).
Therfore, the real fight isn’t the rate that they are taxed in alone, it’s also on protecting the effective rate by tightening exemptions, designing limits carefully, and enforcing compliance.
That’s why enforcement is the real battleground. The OECD highlights that avoidance/evasion and narrow tax bases often undermined wealth taxes and contributed to repeals (OECD, 2018). The IMF similarly emphasises closing loopholes, modernising tax administration, and improving cross-border information sharing, especially when countries prefer not to rely mainly on broad wealth taxes (International Monetary Fund, 2024).
The IMF also explicitly notes that if societies want to reduce extreme wealth toward an upper limit over time, a wealth tax is mechanically better suited than an income tax, because achieving the same wealth-reducing effect through income taxation could require extremely high rates on capital income (International Monetary Fund, 2024).
Therefore, “building a world without bilionares” is better framed as building institutions capable of sustaining high effective taxation at the top, not merely passing a “wealth tax.”
As mentioned over dinner, one proposal is a coordinated top-up on extreme wealth. According to the World Inequality Report, a 2–5% annual tax on net wealth above individuals with over $100 billion (affecting roughly 0.002% of adults) could effect a raising collection about 0.45–1.11% of global GDP (around $500 billion to $1.3 trillion a year), depending on the scenario (World Inequality Lab, 2025a).
At the same time, the IMF argues that countries should first strengthen income taxes, especially in capital gains, and close loopholes, because much top-end wealth grows through gains that stay untaxed until assets are sold (stocks, for example). In parallel, inheritance and estate taxes matter to curb dynastic wealth, but only if anti-avoidance is robust (International Monetary Fund, 2024).
For fairness and political durability, taxes should be organic and adaptable, as well as by serious enforcement, because administrative capacity ultimately determines whether the richest are actually taxed.
In the end, the question is not whether extreme wealth can exist in a democracy, because it already does. The question is whether democracy should be called such if a small number of private fortunes grow large enough to shape markets, narratives, and even the rules of the game. We spend a lot of time watching billionaires launch themselves into space, buy social media platforms, or flirt with politics as if it were another start-up. Real life may be less cinematic; we ought to investigate the spreadsheets, the loopholes, the mobility and the effective rates that quietly drop to near-zero.
If we want societies that feel fair, and states that remain capable, we should pay less attention to the rockets and the headlines, and more attention to their wallets.
References:
Cartoon Movement. (2022, May 31). Tax the rich [Cartoon by Morad Kotkot]. https://www.cartoonmovement.com/cartoon/tax-rich
International Monetary Fund. (2024). How to tax wealth (IMF How-To Note No. 2024/001). https://www.elibrary.imf.org/view/journals/061/2024/001/article-A001-en.xml
Investopedia. (2022, March 29). Oligarch: What it is, how it works, FAQs. https://www.investopedia.com/oligarch-5223757
Mas-Montserrat, M., Durán-Cabré, J. M., & Esteller-Moré, A. (2025). Avoidance responses to the wealth tax. Journal of Public Economics, 246, 105351. https://www.sciencedirect.com/science/article/pii/S0047272725000490
Organisation for Economic Co-operation and Development. (2018). The role and design of net wealth taxes in the OECD. OECD Publishing. https://www.oecd.org/en/publications/the-role-and-design-of-net-wealth-taxes-in-the-oecd_9789264290303-en.html
Stewart, E. (2019, May 2). We are (still) the 99 percent. https://www.occupy.com/article/we-are-still-99-percent#sthash.e5Iqc44T.dpbs
UK Parliament. (n.d.). New directions, new taxes (People’s Budget and “supertax” background). https://hansard.parliament.uk/Commons/1963-04-09/debates/c7a383fd-c3b4-4961-a88c-9d928c2049b6/BudgetResolutionsAndEconomicSituation
World Inequality Lab. (2025a). Global taxation of multi-millionaires (World Inequality Report 2026 insight). https://wir2026.wid.world/www-site/uploads/2026/01/World_Inequality_Report_2026.pdf
World Inequality Lab. (2025b). Executive summary (World Inequality Report 2026). https://wir2026.wid.world/insight/executive-summary/
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