Elon Musk may become the first trillionaire in the world by 2027 according to reports

Income inequality worldwide has escalated to a critical juncture, threatening to tear apart the very fabric of our society. While the rich get richer and the poor get poorer, the middle class continues to shrink. What results is a society divided into the “haves” and “have-nots.”

In 2022, the World Inequality Report revealed stark disparities in global income distribution. The richest 10 percent of the world’s population claims 52 percent of the total world’s income, while the poorest half earns a mere 8.5 percent. On average, an individual from the top 10 percent makes $122,100 annually, compared to just $3,920 for someone from the bottom half. Shockingly, the poorest half of the global population collectively owns only 2 percent of the world’s wealth, while the wealthiest 10 percent hold a staggering 76 percent of all assets.

The numbers only tell half the story. Income inequality has a face and it looks like Tanaka Moyo, the mother of three in Zimbabwe who works for $3 a day. It is Baby Nachito in Chile, where the healthcare system and pharmaceutical companies price life-saving medication at millions of dollars a day. A recent documentary on America’s Poorest Kids follows four U.S. children, revealing heart wrenching truths about life outside the billionaire bubble.

IRS contractor leaks information as the rich get richer

In our societies, despite varying levels of inequality, a fundamental issue persists: a small group amasses immense wealth, while the vast majority struggle to make ends meet. This growing gap extends beyond mere numbers on a spreadsheet; it constitutes a moral crisis that erodes social cohesion and undermines trust in our institutions.

Some argue extreme wealth is simply the result of hard work and investment. However, this perspective often overlooks persistent structural inequalities. When a select few gather astronomical sums, we move beyond rewarding innovation and leadership to endorsing a system which allows elites to acquire unimaginable wealth and far more than anyone would ever need.

Recently, Elon Musk pressured Tesla shareholders to approve a $56 billion pay package, which, along with his staggering $241 billion net worth, highlights the vast concentration of wealth in our society. The compensation package, which a Delaware judge struck down as “unfathomable” earlier this year, exceeds the GDP of more than 50 countries around the globe. Now, according to numerous news articles, assessments show that with the rate his wealth continues to increase, in a few short years, Elon Musk will be a trillionaire – the first in the world.

According to the head of the Internal Revenue Service (IRS), U.S. millionaires and billionaires evade more than $150 billion a year in taxes. This evasion contributes to growing government deficits and creates a “lack of fairness” in the tax system. As a result, wealth inequality in the U.S. has reached its highest level among developed countries and has continued to increase unabated for the past six decades.

Earlier this year, courts sentenced a former IRS contractor to five years in prison for disclosing thousands of tax returns of wealthy individuals to news outlets. ProPublica published the leaked information, exposing how various billionaires, including Jeff Bezos, Elon Musk, and Michael Bloomberg, managed to avoid paying income taxes.

Tax evasion runs rampant across continents: Sub-Saharan Africa bears the brunt

A 2020 New York Times report further revealed that former President Donald J. Trump paid no income taxes in 10 out of 15 years beginning in 2000, largely because he misleadingly reported losses exceeding his income.

The problem exists beyond America as well; a 2023 report indicated that approximately 2,500 billionaires worldwide collectively hold $13 trillion in wealth. Despite their immense wealth, these billionaires pay almost no taxes compared to ordinary taxpayers. According to the 2024 Global Tax Evasion Report, their ability to shelter wealth in shell companies allows them to evade income tax indefinitely.

Given the disparities created by tax loopholes, offshore accounts, and political influence, a crucial question arises: Can income inequality be justified when millions around the world face economic hardships?  Undoubtedly, there is a more equitable solution for rewarding those who have worked hard without incentivizing them to avoid taxes.

Today, nearly 700 million people survive on less than $2.15 per day, which is the extreme poverty line. Sub-Saharan Africa bears the brunt of this crisis, accounting for 60 percent of all individuals living in extreme poverty—389 million people, more than any other region. Alarmingly, the poverty rate in this region stands around 35 percent, the highest globally.

Moreover, of the 20 countries with the most considerable income inequality worldwide, more than half are in Africa. To meet the 2030 poverty reduction target, each country in Sub-Saharan Africa would need to achieve per-capita GDP growth of 9 percent annually for the remainder of this decade. A goal which remains unattainable as long as the current tax acts continue.

Like kings of old, the richest often pay the least while the poor grapple to obtain essential services

Income equality remains a harsh reality for millions who struggle daily, living hand-to-mouth. It represents the difference between a child going to bed hungry or well-fed, and between access to education or a life of illiteracy. Consequently, urgent global and collaborative action including comprehensive policies and initiatives that foster economic development, mitigate inequality, and improve living conditions for millions worldwide is what’s now required.

To address global income inequality, the United Nations made notable strides through initiatives like the Sustainable Development Goals (SDGs). In particular, Goal 10 aims to reduce inequality both within and among countries. However, despite these efforts, the UN’s impact on bridging the income gap remains limited. This is largely due to the voluntary nature of its recommendations and the inconsistent commitment from member states.

In a hopeful development, G20 ministers put forth a proposal to levy a 2 percent wealth tax on the world’s billionaires. Reportedly, as of 2024, there are 3,000 such individuals. This tax could generate $250 billion annually to combat poverty, inequality, and climate change.

In a parallel move, before stepping down from the presidential race last month, President Joe Biden proposed a “billionaire tax” aimed at the wealthiest Americans. He called for a 25 percent tax on those with a net worth over $100 million, emphasizing that “no billionaire should pay a lower tax rate than a teacher, a sanitation worker, a nurse.”

In the battle against global income inequality, some consider the notion of taxing the elites a quick fix. If the wealthy paid their fair share, however, it could truly make a dent in the widening gap between the rich and the poor. It promises a more equitable distribution of wealth and the chance to fund public services like education, healthcare, and infrastructure.

Finding solutions to the global problem of income inequality

The greatest challenge may be implementation. According to a Politico article from 2021, “…no country has yet managed to get enough money out of progressive taxation to fund a comprehensive system of social programs.”

When American politicians imposed greater taxes on the rich, it failed to result in more votes. Further, “the rich can pay people to figure out how to legally violate the spirit of the law” and therefore “it takes a complex administrative machinery to stay ahead of them.”

If global tax systems remain riddled with loopholes and incentivize the wealthy to find ways to avoid or evade paying their fair share, the whole exercise becomes futile. Addressing income inequality remains a multifaceted challenge, demanding a comprehensive strategy. While taxing the wealthy is an essential component, it alone won’t suffice.

Economic think tanks the world over have spent years studying opportunities to make meaningful progress toward reducing income inequality. A quick read of the available literature reveals a deeply complicated process of cause and effect with arguments erupting on every side of the debate. However, we know some things for certain; things that appear in the scholastic literature time and again.

Highlighted in a USA Today article, we know that strong labor union movements increase the middle class. Addressing poverty at the childhood level through early interventions leads to generational changes in wealth. Giving workers more power in labor markets through good policy can also tip the scales.

All of this takes both political will on the part of lawmakers and a collective demand by voters. As a global community facing common problems that do not stop at borders or language differences, we must, as a people, demand a holistic approach to tackle systemic issues and foster opportunities for upward mobility.