Every nation is facing inequities brought on by dramatic technological change, the surging market power of big companies and the fierce competitive pressures resulting from capital mobility. The worst global health crisis in a century has also challenged the world’s economies — especially their public finances — in extraordinary ways. Some countries are beginning to emerge from the covid-19 crisiswhile others are still mired in its depths. Each of us, in our capacity as finance ministers, sees two pressing concerns that could threaten all of our economies despite the differences between them.
First, wealthy people and corporations are doing much better than those at the bottom of the economic ladder. Low-wage workers and parents are forced to choose between their health and the safety of their children, on the one hand, and their livelihoods, on the other. As a result, they have disproportionately borne the brunt of the pandemic’s economic harms. Small businesses are suffering after shuttering to protect their communities. Meanwhile, corporate revenue has soared, and high-income workers and shareholders have emerged from the crisis relatively unscathed.
The second problem is a consequence of the first. Governments desperately need revenue to rebuild their economies and make investments to support small businesses, workers and families in need. And they’ll need more, as the pandemic recedes, to address climate change and longer-run structural issues. Revenue must come from somewhere, though. For too long, revenue has been drawn too heavily from workers, whose incomes are easy to report and calculate. Capital income is more difficult to tax because capital is mobile and income more susceptible to sophisticated accounting games. Continue reading.
Arturo Herrera Gutiérrez is Mexico’s finance minister. Sri Mulyani Indrawati is Indonesia’s finance minister. Tito Mboweni is South Africa’s finance minister. Olaf Scholz is Germany’s vice chancellor and minister of finance. Janet L. Yellen is U.S. treasury secretary.