Poverty inequality around the world is exploding as the rich hoard a disproportionate share of global wealth while the already vulnerable receive fewer resources.

That’s according to a new report released this week by the non-governmental organization Oxfam. The charity publishes an annual report on global poverty at the annual World Economic Forum (WEF) in Davos, Switzerland. The forum is a gathering of the world’s business elite – from CEOs of major corporations to self-made billionaires – to discuss global trade issues.

The world’s five richest men – LVMH boss Bernard Arnault, Amazon’s Jeff Bezos, investor Warren Buffet, Oracle co-founder Larry Ellison and Tesla CEO Elon Musk – have seen their wealth double since 2020, earning $14 million an hour, says the Oxfam report.

But as the world’s few wealthy elites accumulate wealth, global poverty has increased for the first time in nearly three decades, Oxfam said.

Here’s why the charity says inequality is rising and how it proposes wealth redistribution:

Multiple crises result in rich people getting richer and poor people getting poorer

The disruptions that followed the closures due to the COVID-19 pandemic – as well as the inflation that hit many parts of the world in 2022 as a result of the Russia-Ukraine war and also disrupted supply chains – have contributed to more people all over the world live poorer people.

At least 1.7 billion workers worldwide saw inflation rise faster than their wages in 2022, limiting their ability to buy food and pay their energy bills, according to Oxfam’s analysis.

At the same time, the tiny elite group that ranks among the world’s richest people has only gotten richer, according to Oxfam’s findings.

In the last decade, more than half of the world’s new wealth has flowed into the pockets of the richest one percent of humanity. But between 2020 and 2021 alone, that rate accelerated even further: the richest 1 percent received 63 percent of all new wealth, while 99 percent of the world’s population only had 37 percent of new global income.

Oxfam found that these inequalities also have gender and racial aspects. Men owned $105 trillion more wealth than women, while black families in the United States had only 15.8 percent of the wealth of a typical white household.

“While ordinary people make daily sacrifices for essentials like food, the super-rich have exceeded even their wildest dreams,” said Gabriela Bucher, director of Oxfam, in a press release. “Just two years later, this decade is shaping up to be the best decade yet for billionaires – a whirlwind 1920s boom for the world’s richest.”

In the past it was Oxfam’s annual reports on the state of inequality criticized for including indebted individuals in their calculations of the world’s poorest people. For its calculations, the organization used data from Credit Suisse, the Institute for Policy Studies and Forbes, among others.

But one October 2023 report The International Rescue Committee (IRC) found that while the number of people in poverty has declined worldwide, the number of people living in extreme poverty has increased by 80 percent in 13 of the least developed countries, accounting for some of the Oxfam findings confirmed.

What is driving inequality?

According to the Oxfam report, billionaires have benefited enormously from the pandemic. As rich countries pumped money into their economies to support families and those who were unemployed or low-income earners, they also drove up the value of assets and fortunes already owned by the super-rich.

Oxfam also found that wealthy people who own shares in the world’s largest food and energy companies reaped huge profits in 2022. Since these companies generated huge returns and doubled their profits this year, they also paid out large amounts of dividends.

Oxfam also found that one of the key factors exacerbating the inequality gap was the lack of progressive taxation of newly created wealth. The report found that rich people in several countries pay far less in taxes than they did a decade ago. Half of the world’s billionaires, the report said, also live in countries where they don’t have to pay taxes on inherited wealth, meaning $5 trillion in wealth is expected to be passed on tax-free.

All of these factors have caused the world’s billionaires to grow from a total of $6 trillion in 2012 to about $14 trillion in 2022, the report said.

Oxfam warned that the continued accumulation of wealth in the hands of a few could slow countries’ economic growth, contribute to political divisions and lead to cross-sector corruption.

It could also lead to greater climate pollution, the report said, as billionaires are more likely to invest in fossil fuels.

Is there a solution?

Higher taxes, the Oxfam report says, are a way to redistribute concentrated wealth and close the inequality gap.

Many countries have taxed the wealth of the rich less in recent decades, as politicians argue that lower taxation would allow companies to hire more employees, increase competition in the labor force, and raise average wages, which eventually lead to would bring more wealth into the normal range of the person.

According to Oxfam data on Organization for Economic Co-operation and Development (OECD) countries, average tax rates for the richest people have fallen from 58 percent in 1980 to 42 percent currently.

Elon Musk, founder of Tesla and owner of X, formerly Twitter, paid a “real tax rate” of around 3 percent between 2014 and 2018, Oxfam found.

However, several reports have documented that tax cuts for wealthy corporations in the US, for example, have only exacerbated inequality.

In 2017, former US President Donald Trump promised Americans that his Tax Cuts and Jobs Act would deliver benefits for the working class. The law aimed to reduce corporate tax for large companies from 35 percent to about 20 percent. Trump implemented $1.5 million in tax cuts, the largest corporate tax cut in U.S. history.

However, economists Emmanuel Saez and Gabriel Zucman found in their book “The Triumph of Injustice – How the Rich Dodge Taxes and How to Make Them Pay” that the 400 richest families in the U.S. paid an average tax rate of 23 percent in 2018 In 2018, the poorest households paid 24.2 percent more taxes than the richest households.

A 5 percent annual wealth tax could help mobilize up to $1.7 trillion to address humanitarian crises around the world and support countries bearing the brunt of climate change, according to Oxfam.