Indicators and sources for exploring tax privileges of the super-rich INDICATORS AND SOURCES FOR EXPLORING TAX PRIVILEGES OF THE SUPER-RICH The remainder of the publication looks at potential sourc­es to measure inequality and inequality effects of tax sys­tems as well as to identify tax privileges for the super-rich. At the end it contains a few first-country examples looking at how tax analysis has contributed to identifying concrete reform proposals to tax the rich. The annex contains an overview table with different measures of inequality and availability of data described with the goal of identifying those countries that have a high degree of inequality and/ or highly unfair tax systems combined with good data availability that could help to address this issue. WHAT WE WANT(TO MEASURE) Moderate wealth – ownership of a piece of land, a house, and some savings – provides security. Extensive wealth comes with power over the people that work on the land, that live in rented-out apartments and over the employees working for the company invested in. It can also mediate and buy political influence. It can be passed from genera­tion to generation. And, arguably most importantly, over the last few decades owners of capital have increased their share in national income in most countries around the world(see for example Bergholt et al, 2022; Mertens, 2022). The emergence of artificial intelligence will most likely exacerbate this trend, further increasing the concen­tration of wealth. That is why distribution of wealth matters. As a result of colonialisation and accumulation, wealth distribution is ex­tremely unequal at a global scale and in most national con­texts. When asked, most people are not aware of the de­gree of inequality and desire a much more equal distribu­tion. In the absence of comprehensive wealth taxes, the distribution of wealth is usually measured by survey data and the use of“rich-lists” as well as estimates of wealth managers that track the wealth of the very rich. The result­ing estimates are usually quite unreliable. About 5 to 10 per cent of global wealth is hidden in secrecy jurisdictions, which means it is not correctly allocated to the source country and owners in official statistics. Living a decent life requires income to pay for food and shelter, health and education as well as many other person­al needs and public services. For most households, income means the salary from the employer or the products and in­come from subsistence farming or personal business activi­ties. Only a small share of the global population lives from capital income produced by their wealth, mostly in the form of rent and interest payments, dividends and capital gains. Strong labour unions fighting for fair salaries as well as properly functioning regulation of financial markets, housing prices or competition can increase the share of in­come accruing to those that work for it. Data on the so­called labour share, i. e. the share of GDP that accrues to employees as opposed to the owners of capital, is available for nearly every country of the world. But this data faces var­ious statistical challenges, ranging from the uncaptured “shadow economy” through undeclared capital income from anonymous wealth to capital gains that are not mea­sured at all, but provide around 50 per cent of capital in­come. Because income from formal employment is taxed in nearly all countries, official statistics usually capture the dis­tribution of that income somewhat reliably. But gaps in the taxation of capital income often make the measurement of overall income distribution difficult and, once again, sur­veys usually do not fully capture income at the top end. Measuring the distribution of after-tax income and per­sonal welfare is even more difficult because it requires counting and allocating the effects of taxation and social pol­icies to individual households or income groups. This is usual­ly done using household surveys. Figure 6 shows the results of such an analysis for Germany(a picture including transfers is available in the source). Figure 7 shows the redistributive ef­fects of the tax regime in the US. Both the analysis for Ger­many and the US draw on solid official statistics, but require extensive data interpretation while relying on wide-ranging assumptions. This especially goes for income at the very top and the taxation of capital income. Based on better data and more extensive analysis of the very rich, the US example most likely comes closer to reality for the US, but also for the top end in Germany and most other countries of the world. This is why the comparison between Germany and the US reveals that a normal analysis of the distributive effects of tax sys­tems usually misses an essential part of the story. 11