20% of the mega-rich in Latin America are Mexicans

One in every five billionaires in Latin America is from Mexico, many of them having inherited part or all of their wealth in a country where, despite historical inequalities, there is no such thing as wealth or inheritance taxes, Oxfam states in its regional report.

Mexico is characterized because, unlike other countries where the lists of tycoons change every two or three years, here fortunes practically do not change, and if they do it is to change their name, but not their surname, Alexandra Haas, executive director of Oxfam Mexico, explains in an interview.

According to a report by the international organization for Latin America and the Caribbean, of the 109 million millionaires in the region, 22 are from Mexico and accumulate a combined wealth of 219 billion dollars, more than a third of what all the rich people in the region possess together.

This accumulation occurs in the midst of tax systems – not only in Mexico, but throughout Latin America – that tax work at a rate up to three times higher than capital gains, the report shows. Wealth without control, democracy at risk. Why Latin America and the Caribbean need a new fiscal pact.

“In Latin America and the Caribbean, fiscal policy collects little, unfairly and deepens extreme inequality. The tax structure operates contrary to what it should: it wastes its redistribution potential and protects those who have the most,” the report states.

While 50 percent of the population leaves 45 percent of their income in taxes, one percent contributes a fifth of their income, but not of their accumulated wealth, Oxfam reports. This is largely due to the gap between taxes on labor and capital, the report highlights.

Oxfam estimates that in the next 15 to 20 years, 62.21 percent of the wealth of billionaires in Latin America and the Caribbean will be inherited, and despite how historically high inequality has been in the region, only five countries apply taxes on net worth and only nine tax inheritances or donations.

“Mexico is one of the worst tax collectors in Latin America,” Haas points out, and it is in the fiscal area where the pressures from economic power to political power can be seen most clearly, he points out. There is no such thing as wealth taxes, estate taxes, and capital gains are taxed much less than labor.

This collection structure throughout the region has not changed, despite the arrival of progressive governments, the report maintains.

Practically half of the revenue (47 percent) comes from the most regressive taxes, VAT and other consumption taxes, which do not make distinctions between poor and rich, while in some countries capital gains are not touched at all.