Socio-ecological tax reforms can reduce inequalities and promote ecological steering and redistributive effects.
The current German and international tax system is unfair, harmful to the climate, and a threat to democracy due to numerous environmentally harmful subsidies, tax privileges for the super-rich, and exemptions and loopholes for large corporations. Socially and ecologically sound tax reforms can reduce injustices and promote ecological and redistributive effects.
- The long-overdue reduction of climate-damaging subsidies would lead to a reduction in greenhouse gas emissions and generate billions in additional revenue each year, which could be used to finance a socio-ecological transformation.
- In Germany, wealth is distributed very unequally, and the trend is increasing. Yet Germany is a low-tax country for the super-rich, for whom extensive lobbying has created numerous tax privileges and loopholes in tax legislation. The reintroduction of a wealth tax and a comprehensive reform of inheritance and income taxes are important tools for abolishing tax privileges, counteracting growing inequality, and reducing democratic deficits.
- Internationally coordinated higher corporate taxes on the profits of large corporations, such as a global minimum tax rate of over 25%, consistent prosecution of tax avoidance, and the ability to effectively skim off excess profits would enable more democratic control over (digital) corporations.
The fundamental socio-ecological transformation necessitated by the climate crisis requires state resources. Taxes are the most important source of revenue to finance this transformation . A fair tax policy can also ensure that the super-rich and companies that contribute significantly to the climate crisis play a greater role in addressing it.
A targeted ecological tax policy can exert a steering effect by reducing climate-damaging subsidies and expanding environmentally related pricing and tax instruments. Appropriate tax policy promotes socially and ecologically responsible economic activity , makes harmful behavior more expensive, and thus tends to reduce it. In this context, the social impacts of cost increases must be fully considered, and where necessary, appropriate compensation mechanisms must be established for the poorer segment of the population.
Redistribution and a fairer society, in which people feel secure and a good life is possible for everyone, are essential prerequisites for a successful transformation. For an economy and society to be compatible with the 1,5°C target, a great deal would have to change in a short time. Acceptance and willingness to embrace change increase when people feel secure and do not perceive their livelihoods to be threatened by the impending changes.
The climate crisis is already making resources like clean water, food, and fertile soil scarcer, and this will only increase in the coming decades. This development makes a globally equitable distribution of these resources even more crucial. High taxes on corporate profits, wealth, and inheritances can make a significant contribution in the medium term to reducing extreme wealth concentrations and ensuring access to increasingly scarce resources for everyone through fair distribution. This redistribution doesn't necessarily have to involve the distribution of money; it can also take place through the cost-effective or free provision of basic goods and infrastructure.
A fair tax policy reduces democratic deficits caused by extreme wealth concentrations among corporations and the super-rich, and enables stronger democratic oversight. Furthermore, less inequality in wealth distribution counteracts societal divisions. Of course, a fair tax policy is only one component among many. In each individual case, it must be carefully considered where the steering and redistributive effects of a socio-ecological tax policy are appropriate, or where regulatory instruments represent a better option. An example would be banning short-haul flights instead of increasing taxes on kerosene to reduce air traffic.
An internationally coordinated corporate tax system with a global minimum tax and tax rates above 25% would be a first step towards bringing globally operating corporations back under stronger democratic control. This would also improve the conditions for setting and enforcing socio-ecological requirements for companies. Currently, international competition for business locations quickly reveals the limitations of implementing socio-ecological standards within a profit-oriented economic system. Therefore, in the long term, a socio-ecological economy without neocolonial exploitation and within planetary boundaries is only possible if the needs of people, rather than corporate profits, are placed at the center.