Observers on both sides of the political aisle attribute the recent wave of support for authoritarianism to a widespread sense that regular people are being left behind while elites enjoy lives of privilege.
Throughout history, inequality has correlated closely with instability. Inequality has also been a key factor in many revolutions, including those that led to the creation of the USSR and the PRC. More recently in the US, President Trump framed both of his campaigns for President as populist crusades against privileged, out-of-touch elites. Inequality was also a central theme in the left-wing US presidential campaigns of Bernie Sanders and Elizabeth Warren. In the UK, dissatisfaction with inequality fed the campaign for Brexit. In Germany, inequality-related resentment has fueled gains by the far right party AfD. In Italy, it carried Georgia Meloni to power and in Brazil it drove Jair Bolsonaro’s campaign.
Regardless of where one sits on the political spectrum, these data points together illustrate the geopolitical risks of allowing inequality to grow unchecked.
Responsible taxation can be part of the solution, according to respected voices including academic economists from around the world, the UN Committee of Experts on International Cooperation in Tax Matters, the OECD, the European Environment Bureau, Oxfam and Global Citizen. Even noted fiscal conservatives at the Peterson Institute have raised the idea.
Beyond the proposed UN Convention on International Tax Cooperation, only a new layer of global governance, supplementing existing systems, could responsibly limit the flight of capital to tax havens and enable responsible taxation for all. This is the view of key figures ranging from author Thomas Piketty to former German finance minister Wolfgang Schäuble. It’s also why former US Treasury Secretary Janet Yellen helped lead the G20 toward adoption of a global minimum tax on corporations, a move supported by 136 countries, representing more than 90% of the world’s economy as recently as 2021. Countries including France and Brazil have pushed for a parallel global minimum tax on individual wealth, with occasional support from the US.
Addressing corruption is critical to tackling inequality and ensuring that public resources are fairly collected and distributed, alongside progressive and responsible taxation. Corruption diverts funds away from essential services like healthcare, education, and infrastructure, deepening poverty and denying marginalized communities access to opportunities. By curbing corruption and strengthening equitable taxation, governments can rebuild trust, uphold the rule of law, and create more just and inclusive societies.
Absent stronger global governance, countries will continue to race to the bottom, siphoning an estimated $20 trillion out of reach of taxation and regulation. Unless there is a significant change in the existing systems, inequality will likely continue to grow, driving popular resentment, fueling autocracy, and undermining stability.
| Two global platforms are important references for donors. Launched in 2024, the Taskforce on Inequality and Social-related Financial Disclosures is a global initiative to develop a standardized framework for financial institutions to disclose their dependencies and risks related to social issues and inequality. Established in 2010, the International Centre for Tax and Development focuses on improving tax policy and administration in lower-income countries. |