Are Global Taxes the Solution to Global Poverty?

taken from:  http://www.davidicke.com/

1. Introduction
For developed societies, global poverty is an issue seen mainly on the news, in fundraisers and on left-wing political speeches; it does not seem to be directly related to us in any way. But, what if we are actually accountable for nurturing global poverty? What if our international agreements are directly responsible for the impoverishment of millions of people? I intend, first, to show that international arrangements are liable for global poverty; then, I look at how a global tax on natural resources is justified in order to fulfill this duty to the global poor; and finally, I analyze the impact that such a tax could possibly have in solving global poverty.

2. Causes for global poverty
Before answering if global taxes could solve global poverty, I must examine if they are justified to do so. Domestic issues tend to be the dominant reasons used to demonstrate a country’s poverty levels. Although it is true that some poor countries are fostering poverty with their political and social instability, these problems are not only due to domestic factors: part of the blame falls on the international framework that nurtures this instability: “The worse-off are not merely poor and often starving, but are being impoverished and starved under our shared institutional arrangements” (Pogge 2001: 63). Solving global poverty is not only in the hands of altruists and NGOs; the better-off are liable for much of the world’s poverty because they are not fulfilling their negative duty of not making profit “from the unjust impoverishment of others”. (Pogge 2001: 60). It is a mistake to see this issue as a matter of charity; solving global poverty is a duty that every person has. Global responsibility for poverty justifies the poor’s entitlement to retribution.

Three causes that show this responsibility to the poor in a global scale are “the effects of shared institutions, the uncompensated exclusion from the use of natural resources and the effects of a common and violent history.” (Pogge 2001: 61). The international arrangements tolerate the polarization of wealth by allowing a minority to hoard the profits from natural resources that are owned by all. Periods of conquest and colonization have created a global power structure in which global elites dominate and exploit the rest of the world (Pogge 2001; Brock 2009).

The “might is right” accord is an example of these international arrangements that tolerate impoverishment (Wenar 2008, 2013). A government has the right to sell its country’s natural resources provided that it has coercive control over its territory. Each state freely decides who has legal right to sell to its citizens, regardless of how this seller has gotten control of the country or how does it treat its people. It seems, then, that “while there is an international market, there is no international system of property law” (Wenar 2013: 299): the international community tolerates buying natural resources from governments that do not have their people’s consent to sell. Despite that the local governments are the ones stealing from their people, it is the rest of the world who allows this to happen. Local governments may be faulty but the international community is responsible as long as it consumes their resources.

A second justification is proposed from a Lockean perspective of property. It “affirms the equal claim of all humanity to land and other planetary resources” (Casal 2011a: 308-9): because everyone is entitled to the Earth’s resources, if there is not enough for all, whoever appropriates a piece of it must redistribute a proportional part of the profit to the rest of humanity (Locke 1689: Ch.5). The global elite profits from the use of the world’s resources while leaving the global poor without their piece of the cake. If natural resources are all of humanity’s property then the profits should be distributed accordingly (Pogge 2001, 2011).
But, despite that the poor’s entitlement seems justified, changing the status quo to a less unjust system requires political will (Crisp & Jamieson 2000: 94-97). Solving global poverty will be farfetched as long as the wealthy and powerful benefit from the status quo. So this is an issue that cannot be solved with individual moral will; it requires an admission of responsibility to the global poor and consequent legal actions to enforce this duty.

3. A global tax on natural resources
Having seen that the global poor are entitled to benefits taken from natural resources, the redistribution of profit could be solved with a global tax. As noted by Paula Casal (2011a: 313), natural resources are liable for global taxation because they are non-produced, limited, arbitrarily distributed and essential for life. They are everyone’s property and needed by all, but their proceeds are not being distributed to all entitled: in some cases a country’s elites are hoarding the profit from the lower classes; in others, powerful nations are not sharing the benefits with the rest of the world. There is a global minority that keeps most of the proceeds, and this unjust distribution has to change so to provide to all what they are entitled to.

A global tax on natural resources is justified by the assumption that governments do not have “full libertarian property rights with respect to the natural resources in their territory” (Pogge 2001: 66), hence, they are required to share part of the profit with the rest of the world. I will look at the most relevant propositions for such a tax, focusing mainly on Pogge’s Global Resource Dividend (GRD) and the improvements proposed by his critics. Following Casal (2011a), I will analyze tax alternatives from three perspectives: tax base, tax rate, and distributive principles.

3.1. Tax base
Concerning the tax base, Pogge proposes taxing the extraction of non-renewable natural resources (crude oil, minerals or metals) and the exclusive “occupation” of renewable resources (Pogge 1994: 200; 2011: 342-343). Taxing extraction means that only used natural resources would be liable to pay. But if an “occupation” tax on renewable resources (land for farming, buildings or sea access) is added, tax revenue would increase creating a bigger positive impact on poverty, as Casal notes (2011a: 314-320). A step even further would be to tax the “ecological space” used for all of the production process and not only its extraction or occupation, as Tim Hayward suggests (2005). A tax “should be levied on those who ultimately derive more economic benefit from the exploitation of raw resources rather than on those who, engaged in primary extraction, will generally yield the least added value from the resource.” (Hayward 2005: 324). This means that the tax would not fall on the extractors, but on those who have the largest ecological impact. This would transfer the tax burden from some resource rich countries (which could be very poor), to industrially powerful ones (which are usually the wealthier) (For more possible tax bases see Brock 2008).

3.2. Tax rate
In relation to tax rates, Casal proposes progressive taxation as optimal for reducing the economic burden on the least-advantaged. A flat tax rate, as proposed by Pogge, “unfairly expects less wealthy individuals to contribute a larger percentage of their income to poverty eradication than those who are wealthier.” (Casal 2011a: 320). On the contrary, if tax rates are proportional to pollution levels or to the ecological footprint, regressivity could be avoided: those who have a bigger impact on natural resources would pay higher taxes and the rate would decrease proportional to use.

The problem of taxing proportional to use is that a higher burden would fall on late developers. These currently consume large quantities of resources, while the most developed, who have consumed large quantities in the past, would be less penalized because they currently rely on more efficient technologies that reduce their misuse of resources (Casal 2011a: 315). This problem would not be solved with Hayward’s “ecological space” approach, but a selective tax on the final use of the resource, as Casal proposes with luxury taxes on disproportionate use of resources, would also transfer the tax burden from the poor to the wealthy (Casal 2012: 424-425).

3.3. Distributive principles
How should the revenue be distributed for it to have the largest possible impact on global poverty? Revenue could be distributed either directly to individuals, to their governments, or as global public goods. According to cosmopolitan views, individuals should be directly compensated, but it seems unfeasible to transfer regular payments to all of humanity. However, distributing to governments also has its complications. For example, which countries should receive these benefits? From an egalitarian perspective, all states should receive a share proportional to its poor population: this would provide a small benefit to the largest possible amount of people. The problem is that, depending on the tax revenue, there could be poor societies giving more to the tax than what they were receiving (Casal 2011a: 320). And if distributed only to countries below an economic threshold, many poverty groups would be excluded from revenue, such as extremely poor citizens of wealthy but largely unequal nations.

Uncooperative governments create another problem for distribution. “As the history of foreign assistance programs shows, some governments would use GRT revenues to benefit urban elites, to build military machines, or simply for personal enrichment.” (Crisp & Jamieson 2000: 97). Oppressive regimes tend to care little for international sanctions and penalties and even less for the welfare of their people. How can the poor populations of these countries be compensated?

Pogge suggests that if “funds cannot be used effectively in a particular country, then there is no reason to spend them there” (Pogge 2001: 68). He intends to compensate this by investing “on institutional redesign and global public goods” (Pogge 2011: 347). I agree that the revenue should be used effectively, but there is no excuse for depriving these peoples from their entitlements. If the fundamental justification for the global tax is everyone’s right to the benefits taken from natural resources, then excluding the poor of oppressive governments would destroy it from its foundations. Leif Wenar’s “Clean Hands Fund” could have a solution to this problem (2008, 2013): the tax revenue for the poor of uncooperative governments would be safeguarded in a fund until the country’s political situation ensures that it can be properly used.

Pogge affirms that using the tax mainly to provide public goods would be the best distributive solution (Pogge 2011: 350-351). Casal takes a prioritarian approach, supporting first those under an extreme poverty line and going upwards from there (Casal 2011b: 364-365). Although all poverty groups cannot be fully provided by implementing these two distributional principles, hence, solving global poverty, I agree that these would have the largest possible effect. If Wenar’s proposal for uncooperative governments is included, the scope of impact of the global tax would rise even more.

4. Conclusions
Profit from natural resources is being hoarded by a minority and it should be redistributed to all those who are entitled to it. To this effect, taxing the use and occupation of these resources with a progressive rate would be beneficial. But as tax bases and rates grow, so do its obstacles. Distribution is one of the major complications for its implementation: non-ideal theory shows that many social groups will not be appropriately benefited by the scheme. Also, the status quo is a hard habit to break, and even more so if those who control it are benefited by it staying as it is. So, the tax’s major problem is that as it becomes more ambitious, its political feasibility decreases. The closer we get in theory to a global tax that can solve global poverty, the farther we are in practice from being able to implement it. Society must become conscious of its duty with the global poor; this is the first and most fundamental step to take. Because in a global order that resembles Hobbes’ State of Nature, if there is no collective consciousness and common coercive structure that imposes sanctions, every social group will be guided mainly by self-interest.

Bibliography
Brock, G. (2008). ‘Taxation and Global Justice: Closing the Gap between Theory and Practice’, Journal of Social Philosophy 39 (2): 161-184.
Brock, G. (2009). Global Justice: a Cosmopolitan Account, Oxford: Oxford University Press.
Casal, P. (2011a). ‘Global Taxes on Natural Resources’, Journal of Moral Philosophy 8: 307-327.
Casal, P. (2011b). ‘Rejoinder to Pogge and Steiner’, Journal of Moral Philosophy 8: 353-365.
Casal, P. (2012). ‘Progressive Environmental Taxation: A Defence’, Political Studies 60 (2): 419-433.
Crisp, R. & Jamieson, D. (2000). ‘Egalitarianism and a Global Resource Tax: Pogge on Rawls’, V. Davion & C. Wolf (Eds.) The Idea of a Political Liberalism, Lanham: Rowman & Littlefield Publishers.
Dietsch, P. & Rixen, T. (2012). ‘Tax Competition and Global Background Justice’, The Journal of Political Philosophy (Forthcoming).
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Locke, J. [1689]. ‘Essay Concerning the Original, Extent, and End, of Civil Government’, R. Hay (Ed.) Two Treatises on Government. Ontario: McMaster University.
Pogge, T. (1994). ‘An Egalitarian Law of Peoples’, Philosophy and Public Affairs 23 (3): 195-224.
Pogge, T. (2001). ‘Eradicating Systemic Poverty: Brief for a Global Resource Dividend’, Journal of Human Development 2 (1): 59-77.
Pogge, T. (2011). ‘Allowing the Poor to Share the World’, Journal of Moral Philosophy 8: 335-352.
Wenar, L. (2008). ‘Property Rights and the Resource Curse’, Philosophy and Public Affairs 36 (1): 2-32.
Wenar, L. (2013). ‘Fighting the Resource Curse’, Global Policy 4 (3): 298-304.

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