The stark reality of declining international aid, facing its sharpest contraction on record, has prompted economists to explore unconventional solutions for funding humanitarian and development assistance. A recent study, involving researchers from the ICESI School of Economics and the University of East Anglia School of Global Development, suggests that taxing the world’s wealthiest individuals and corporations could significantly bridge these funding gaps, potentially saving millions of lives in low- and middle-income countries. This research emerges as official development assistance, known as ODA, is being cut by nearly a quarter, with major donors signaling further reductions through 2026.
Lucio Exposito, a senior economist on the study, highlighted the growing indebtedness among donor nations and their increasing reallocation of resources towards military spending. He posits that funding humanitarian assistance through the taxation of large fortunes represents one of the most viable strategies available. The implications of continued ODA defunding are severe, with projections indicating a potential 7.6 million deaths by 2030, including 1.4 million children under the age of five. This grim baseline served as the crucial point of comparison against which various wealth redistribution policies were evaluated by the researchers.
The global landscape features over 3,000 billionaires, whose collective wealth has reached a record €17.4 trillion, marking a €3.46 trillion increase from the previous year. The study modelled that even a modest 3% tax on this immense fortune could lead to a staggering 29.5 million fewer deaths by 2030. Even a smaller 1% wealth tax was associated with preventing 15.1 million deaths. Beyond direct wealth taxes, other financial mechanisms also showed substantial potential. A tax on financial transactions, often referred to as a Tobin tax, could avert approximately 24.5 million deaths, while a global minimum tax on multinational companies earning over €750 million might prevent around 20.1 million deaths. These figures, while modelled estimates, underscore the immense potential of such policies to mitigate the negative impacts of reduced aid.
Researchers meticulously analyzed data spanning from 2002 to 2021 from 59 low-income and lower-middle-income countries, collectively representing 3.9 billion people. Their modelling then projected how these different taxation policies could offset the anticipated aid reductions through the end of the decade. The concept of wealth taxation is not entirely new; Spain, for instance, introduced a solidarity wealth tax in 2022, applying rates between 1.7% and 3.5% on individuals with net assets exceeding €3 million. France has also debated a 2% tax on ultra-high-net-worth individuals, though a recent proposal did not pass the Senate. Historically, countries like Sweden implemented a wealth tax for decades before its abolition in 2007.
Despite varying historical success and political hurdles, wealth taxation has seen renewed international momentum. Notably, at the World Economic Forum in Davos earlier this year, hundreds of millionaires and billionaires from dozens of countries publicly called for governments to increase taxes on the super-rich. This sentiment reflects a growing acknowledgement of widening inequalities. Davide Rasella, an ICREA Professor at ISGlobal who conceived and coordinated the study, emphasized the profound disparity in the world. He observed that while a small number of individuals and corporations accumulate wealth at an unprecedented pace, millions continue to die due to a lack of access to basic, often low-cost, humanitarian interventions.
The findings from this research clearly demonstrate that implementing even modest wealth redistribution policies, many of which align with recent high-level international agreements to support global development, could literally save tens of millions of lives in the coming years. It presents a compelling argument for re-evaluating global financial structures in the face of diminishing traditional aid.
