Public Goods
Taxing the super-rich to save capitalism from itself
[Usual Caveat: AI Generated translation (with slight edits) of a piece written in Italian]
The distribution of income has become topical again in recent days, and it is likely going to be one of the issues that will characterize the debate on the global governance of the economy in the coming months.
First, U.S. President Joe Biden announced a plan to reduce public debt centered on raising the minimum corporate tax from 15% to 21%, and on a minimum income tax of 25% for billionaires. The announcement is especially significant because it was made in the traditional State of the Union address, a solemn moment that this year also marks the beginning of the election campaign for the November elections. It is no coincidence that Biden has decided to call on the super-rich and corporations, especially the largest, to contribute the most to public finances’ healing: they are in fact the two categories that have managed to offload most of the inflation of recent years on consumers, wages and the less well-off categories in general.
The plan is highly unlikely to become a reality in a Congress dominated by a radicalized Republican Party, united behind Donald Trump, and conservative Democrats. But its symbolic significance is important and makes it clear what interests the president intends to defend in the November elections. With this proposal, the Biden administration proves once again, at least as far as economic issues are concerned, to be the most progressive in recent decades, much more courageous in attempting to protect the middle classes than the iconic, but ultimately too timid, Barack Obama.
A minimum tax rate for the super-rich
The issue of tax justice, and this is the second piece of recent news, is also at the center of the agenda of Lula’s Brazilian government, which in 2024 holds the rotating presidency of the G20. The G20 is probably the most significant body today for the coordination of economic policies at the international level. It is therefore particularly significant that the idea of reintroducing more progressivity by taxing the super-rich, which is not new in itself, is being discussed there.
In front of the G20 finance ministers that were meeting in São Paulo, the Berkeley economist Gabriel Zucman pleaded for a fairer global system, first of all insisting on how tax progressivity, being crucial for financing public goods such as health, education, infrastructure, is one of the pillars on which the growth and the social contract of well-functioning democracies are based. Second, documenting how the tax systems of most countries have, in recent decades, become fundamentally regressive, especially with regard to the few thousand super-rich that sit at the top of the income distribution. In France, for example, the poorest 10% of the population pays almost 50% of their income in taxes, while the super-rich pay less than a third (the figure is taken from the 2024 Global Tax Evasion Report).
The reasons for this aberration are well known: the unbridled rush of recent decades to fiscal dumping, the benefits offered by many countries to multinationals and higher income owners in an attempt to attract them, have created a multitude of tax niches and possibilities for the wealthier to structure their income and their fortune in such a way as to generate low or no taxable incomes.
Precisely to avoid fiscal competition between countries, which allows the wealthier (but also multinationals) to travel in search of tax havens, Zucman and others are pushing for a global solution, along the lines of the BEPS agreement reached at the OECD in 2021 on the taxation of multinationals. For this reason, the initiative of the Brazilian presidency and the decision of the G20 finance ministers to commission a report that goes into the details of the proposal are very good signs.
Beyond the details that will need to be worked on, crucial to avoid loopholes and avoidance, the proposal by Zucman the economists of the Tax Observatory he heads, on which the G20 will discuss in the coming months, is that of a minimum rate of taxation on the super-rich, designed taking as a model the aforementioned OECD agreement on the minimum rate for multinationals. Since income, for the reasons mentioned above, is very difficult to compute, the international community should agree that taxpayers pay at least a certain percentage of their wealth in income taxes (Zucman proposes 2%). The proposal has several advantages: (1) those who already pay high income taxes would not have any additional burden, while those with large wealth that manage to hide their income from the tax authorities (in a more or less legal way) would be called upon to pay. (2) in many countries there are already instruments for assessing wealth, which would therefore only need to be generalised and harmonised. (3) as with the minimum tax on multinationals, mechanisms can be devised to discourage the relocation of wealth to countries that decide not to cooperate. (4) even with just a low rate like the one proposed by Zucman, it would be possible to obtain tax revenues of hundreds of billions a year, which are needed above all by the poorest countries to finance welfare, ecological transition, and infrastructure for growth.
Last, but certainly not least, being able to get the richest to contribute to the common good would help at least in part to restore the sense of justice and trust in the social contract that has progressively eroded in recent decades. As Zucman concludes in his address to the G20 ministers, “Such an agreement would be in the interest of all economic actors, even the taxpayers involved. Because what is at stake is not only the dynamic of global inequality: it is the very social sustainability of globalization, from which the wealthy benefit so much.”
The conservative revolutions of the early 1980s ushered in an era in which the watchword was simply “get as rich as you can and think only of yourself” (exemplified by Gordon Gekko’s praise of greed in Oliver Stone’s masterful Wall Street). That era did not bring us the promised prosperity or stability. On the contrary, we now live in sick democracies, unstable economies characterized by intolerable levels of rent seeking and inequality. In the 1930s, one of Keynes’s goals in pleading for an active role of the government was to save capitalism, in crisis and threatened by the rise of the Soviet Union. The many who are in love with the supposed Great Moderation of the 1980s and 1990s stubbornly opposing all attempts to correct excessive inequality, should think twice. Instead, they should endorse wholeheartedly attempts such as that of the G20 Brazilian presidency to save capitalism above all from its internal enemies, far more dangerous than the external ones.
Save the Date – 21 February 2024– EU and US state practice in the Covid-19 response: National law and policy improvements and their relevance to WHO Pandemic Treaty negotiations
Knowledge Ecology International (KEI) invites delegates attending the 8th meeting of the WHO Intergovernmental Negotiating Body (INB) to a side event on Wednesday, 21 February 2024. This event is hybrid. For registration, please contact thiru [at] keionline.org.
Title: EU and US state practice in the Covid-19 response: National law and policy improvements and their relevance to WHO Pandemic Treaty negotiations
Date: Wednesday, 21 February 2024
Time: 18:00 CET to 20:00 CET
Speakers include:
Dr Ellen ‘t Hoen – Director, Medicines Law & Policy
James Love, Director, Knowledge Ecology International (KEI)
As the WHO pandemic treaty negotiations unfold, key policy tensions remain on provisions involving the transfer of technology and know-how, access and benefit sharing, financing, and attaching conditionalities to publicly funded research and development including pandemic countermeasures.
Meanwhile, several countries and regions continue to improve national and regional laws and policies to ensure the safeguarding of public health, including ongoing efforts to streamline compulsory licensing in the EU, the intensive application of government use during COVID by the US government, and the recent development of clarifying the use of march-in rights.
These developments in the EU and the US provide significant reference points for the WHO INB negotiations. The side event aims to introduce the recent major developments and practices in the US and the EU concerning access to medicines, R&D conditions and intellectual property, and to discuss the relevance of these developments to the ongoing INB negotiations in the WHO.
A recording of the event can be found here.
Ellen ‘t Hoen’s presentation can be found here: https://medicineslawandpolicy.org/wp-content/uploads/2024/02/Ellen-t-Hoen-intervention-21-Feb-INB8.pdf
James Love’s presentation can be found here:
USA, non-voluntary-use-patents-INB, 2024
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EB 154: KEI statement on WHO’s work in health emergencies
On 25 January 2024, Knowledge Ecology International (KEI) delivered this statement on WHO’s work in health emergencies.
There is an ongoing need to make investments in countermeasures to tackle possible pandemics.
The current systems of incentives for drug development are inadequate, given the uncertainty of the demand for countermeasures.
Public sector funding of R&D is needed, as well as incentives delinked from high prices or monopolies.
The two primary challenges as regards the pandemic agreement are:
(1) a global framework to share the costs of funding R&D, and
(2) agreement on financing approaches that are consistent with the objectives of timely, affordable and equitable access.
The agreement also needs to provide incentives to open-source the science, technology, inventions, data and cell lines and manufacturing know-how for countermeasures. For these, we endorse the Open Source Dividend, and technology buy-out approaches.
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WIPO CDIP 31: Opening statement of Brazil
On Monday, 27 November 2023, Brazil delivered the following general statement at WIPO’s Thirty-First Session of the Committee on Development and Intellectual Property. The statement was delivered by Ambassador Guilherme Patriota, one of the architects of WIPO’s Development Agenda.
General Statement by Brazil at the Thirty-First Session of the Committee on Development and Intellectual Property, November 27, 2023.
• Thank you Madam Vice-Chair.
• And I thank DG Daren Tang, DDG Hasam Kleib and the CDIP WIPO team for supporting this session and this Committee.
• The development agenda is an opportunity for WIPO to improve its credentials as a member of the UN family, by adjusting its intellectual property mandate to effectively help member states, especially developing member states and LDCs, to achieve their development goals.
• As we all know, but with time may start to forget, the development agenda for WIPO was meant to produce a change in culture and in the modus operandi of an organization to often more concerned with protecting the interest of rights holders, especially large multinational corporations, instead of making the IP system work for individual creators and innovators and for society.
• The central element of the development agenda was and still is the norm-setting one, not technical assistance and cooperation, though important these may be.
• Projects on the agenda of the CDIP are positive overall and have been elaborated respecting the member-driven and needs-based own assessments of interested member states. These are the guidelines established by the 2007 agreement that created this standing committee, and we must make sure we continue to abide by them.
• Secretariat cooperation and engagement, one must conclude, fully aligns with the neutrality that was emphatically required of it by the development agenda decision and its recommendations. Such neutrality requirement, of course, was made explicit in 2007 for a reason, and basically because the record for the organization was not the best in this regard.
• There were innumerous instances in the past when developing countries were guided towards unbalanced IP enhancing processes that did not fully take into consideration their respective levels of development and capacities. Nor the flagrant asymmetries between their national capacity to generate protectable innovation or creativity and those of developed members and their global corporations.
• The delegation of Brazil wishes to recognize that circumstances have changed 16 years after the creation of CDIP, now under the leadership of DG Daren Tang, who is clearly more amenable to a multidimensional and holistic and approach to WIPO’s activities. And we commend him for that.
• Times have also changed. We now have the COVID-19 pandemic in hindsight to remind us of the importance of a public interest approach to intellectual property, and that we must focus on people’s health and lives as the overriding priority. It took a tragedy of global proportions for the IP system to move an inch towards a better public-interest private-profits balance in vaccines, as the TRIPS Waiver under the MC12 mandate of the WTO demonstrated. We now lack the subsequent step of extending the waiver to therapeutics and diagnostics. It was meant to be ready by the end of this year. But we are nowhere near such an outcome.
• A climate crisis is looming, and nations are preparing to make good on their UNFCCC and Paris Agreement nationally determined contributions. Green industrial and energy transitions are on the way or being planned. Sustainable agriculture, biodiversity protection, clean water and sanitation, keeping the seas and their natural resources sustainable, cutting down carbon emissions, promoting sustainable patterns of consumption, protecting forests and dealing with AI are objectives that have acquired renewed urgency. They call for access to sustainability related technologies, most of it protected by IP, and therefore not widely or readily accessible where most needed, or simply unaffordable because of the strong monopoly rights that lock them in. Much technology, by the way, has been produced with the help of public money lavishly provided by Governments in advanced economies to accelerate R&D in these critical sectors. Such new industrial subsidies are in the order of trillions, not billions, mostly out of taxpayer’s money. The ensuing technology must not all be privately or indefinitely appropriated through IP instruments without due consideration of their public-interest value and relevance for sustainable development.
• The main message from my delegation, therefore, is that health, sustainability, food security and climate related IP should be balanced towards assisting us with our common development goals within the framework of the 2030 Agenda for Development, and beyond. This should be discussed by members of CDIP, with appropriate development-oriented inputs from WIPO and other relevant agencies of the UN, academia, and NGOs. And it should be practical so that members from developing countries are better placed to engage in IP related norm-setting exercises, within the WIPO framework or in other venues. Such as in the elaboration of the WHO Pandemic Treaty, the climate-change related COP negotiations, or the WTO discussions on the TRIPS Waiver extension or on e-commerce.
• Speaking of the digital sphere, it is Brazil’s view that CDIP must also contribute to a more development-oriented approach to normative discussions in the SCCR related to the rights of authors, musicians, creators, and performers. Their rights are being encroached upon by dominant digital platforms. Because of their overwhelming accumulated power, income and creativity are being sapped in many parts of the developing world where audio, literary and video creations have developed as unique expressions of diverse national and local cultures. Brazil is interested in protecting the rights of individual musicians and creators in this new world of streaming and looks to the CDIP to engage in specific projects, studies and normative work to deal with the challenges posed by digital platforms and streaming services to individual creators and performers.
Thank you.
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INB 7: Written statement by Knowledge Ecology International
INB 7
Written statement by Knowledge Ecology International
November 2023
The current draft of the pandemic accord includes provisions on limitations and exceptions to intellectual property rights that while well intentioned, are problematic.
Parties do not need to refer to the WTO TRIPS Agreement or a waiver. Global rules on exceptions are broad enough. What’s needed is the implementation of laws and use of exceptions at the national level.
A more general approach, modeled after the WIPO Marrakesh Treaty for the Blind, would require parties to have adequate exceptions in their national laws, and to use them when needed. This could be done in two parts:
- The first would be an obligation to review and modify domestic laws to ensure that there are sufficient exceptions to exclusive rights in intellectual property in order to respond effectively to a pandemic.
- The second would be an obligation to use the exceptions in domestic laws, to the extent necessary, to enable the research activities, scaling of manufacturing, sharing of manufacturing technology, and distribution of countermeasures in a manner consistent with the objectives of the agreement, including those relating to the transfer of technology in a pandemic and equitable access to affordable products.
The United States and the European Union would find such provisions consistent with current policies and past practices.
The United States already has a very effective legal mechanism for the non-voluntary use of patents, and one that was used extensively by the U.S. government in 2020 and 2021, when dozens of companies received an “authorization and consent” from the federal government (FAR 52.227-1) to use any USPTO granted patents without the permission of patent holders. These contracts were used both to undertake R&D and to provide a variety of products to the public, including vaccines, diagnostic tests, therapeutics and other countermeasures.
The European Union is now considering a sweeping proposal on medical emergencies that addresses not only the use of compulsory licensing of patents, but also exceptions to regulatory test data, caps on royalties to patent holders, and extensive technology transfer measures.
Recital 32 of the European Parliament on the proposal for a regulation of the European Parliament and of the Council on compulsory licensing for crisis management and amending Regulation (EC) 816/2006 provides robust language on technology transfer that the INB Bureau and Member States may also wish to consider. Recital 32 states:
Where appropriate, the Commission should oblige the rightsholder to disclose the trade secrets which are strictly necessary in order to achieve the purpose of the Union compulsory licence Indeed, it is possible that the detailed description of how to carry out the invention might not be sufficient and complete enough to enable the licensee to efficiently use that invention. This could encompass, without being exhaustively limited to, the comprehensive transfer of necessary technology, expertise, data, samples, and reference products essential for production and obtaining market authorisation in collaboration with the licensee, taking into account each other’s public interests.
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INB 7: Oral statement by Knowledge Ecology International
On Monday afternoon, 6 November 2023, Knowledge Ecology International (KEI) delivered the following oral statement (in person) at the 7th meeting of the World Health Organization’s (WHO) Intergovernmental Negotiating Body (INB).
INB 7
Oral statement by Knowledge Ecology International
6 November 2023
The current 30 page draft of the pandemic accord includes provisions on limitations and exceptions to intellectual property rights that while well intentioned, are problematic.
Parties do not need to refer to the WTO TRIPS Agreement or a waiver.
Global rules on exceptions are broad enough. What’s needed is the implementation of laws and use of exceptions at the national level.
To address IP issues in a way that is useful, consider a more general approach, modeled after the WIPO Marrakesh Treaty for the Blind, that the Parties:
will review and modify domestic laws to ensure that there are sufficient exceptions to exclusive rights in intellectual property in order to respond to a pandemic, and
In the event of a pandemic,
will apply the use of exceptions in domestic laws relating to intellectual property that are necessary to enable the necessary research activities, scaling of manufacturing, sharing of manufacturing technology, and distribution of countermeasures in a manner consistent with the objectives of this agreement,
including those relating to the transfer of technology and equitable access to affordable products.
Useful models for national rules include the current proposals in the European Union, and the United States authorization and consent system under FAR 52.227-1, which was used extensively in 2020 and 2021 to address the COVID 19 pandemic.
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