The Price of Inequality: Why Tax is a Human Rights Issue

Author: Alexandra Hever, MA

June 27, 2025

Introduction

Taxation is often understood as a simple tool of economic policy and overlooked as a pivotal factor in either enabling or obstructing human rights. However, tax systems that are designed to favour the wealthy and powerful over the needs of the rest of society have played a central role in producing the present landscape of deepening inequality, rising austerity, underfunded public services, and an ever-widening gap between rich and poor. In this climate, it is vital to understand how tax policies are actively driving some of the most pressing human rights challenges globally. Acknowledging this connection is the first step towards challenging the fiscal status quo and harnessing taxation’s transformative potential for levelling inequality, funding essential services, promoting democracy, and ultimately working towards, rather than against, human rights.

[Image Source: A human rights-based approach to tax systems - Dejusticia]

The Link Between Tax Systems and Human Rights

The relationship between tax and human rights is multifaceted. First of all, the revenue raised by taxes provides governments with the necessary funds to fulfill their obligations to respect, protect, and especially to fulfill human rights. In particular, the broad availability and accessibility of public services, indispensable for rights related to health, education, or social security, cannot be effectively realized without sufficient resources being mobilized by the state through taxation. Legally, this concept is enshrined in Article 2.2 of the International Covenant on Economic, Social and Cultural Rights (ICESCR) which stipulates that each State party to the Covenant must “undertake take steps, individually and through international assistance and co-operation, especially economic and technical, to the maximum of its available resources, with a view to achieving progressively the full realization of the rights.” Thus, taxation is a key area of scrutiny to assess whether a state is mobilizing the maximum possible resources towards the realization of human rights, as required by international law. 

In addition to funding public services, taxation serves as a tool for the redistribution of wealth, a critical component in addressing poverty and inequality. When taxes are progressive, the tax rate increases with income, which ensures that those who earn more, contribute more. In contrast, regressive taxes such as Value-Added Tax (VAT) are set at a flat rate regardless of income, disproportionately affecting lower-income individuals who consequently spend a larger share of their income on essential goods. Recognising this disadvantage, the United Nations (UN) Special Rapporteur on Extreme Poverty and Human Rights, Philip Alston, emphasised in his report that “appropriate redistributive measures through taxation and other fiscal policies must be seen as an integral part of a commitment to ensuring full respect for human rights across the entire society.”

While the funds generated through taxation are particularly vital for the fulfillment of economic, social, and cultural rights, taxation also strengthens civil and political rights. When individuals contribute to state revenue by paying their taxes, they acquire a stake in how those resources are allocated and spent. This promotes the right to political participation and a strengthened social contract between citizens and the state, which in turn fosters greater government accountability, transparency, and responsiveness. It also ensures resources are spent in a way that is broadly representative of, and beneficial to, society as a whole.

Finally, from a broader perspective, human rights offer a powerful normative framework for evaluating tax systems and redefining the purpose we want them to serve. A rights-based approach urges us to prioritize human dignity, equity, and justice, as well as to examine the ways in which existing tax structures may be failing to uphold these fundamental values.

The Human Rights Costs of an Unfair Tax System

Despite its potential as a tool for the realization of human rights, the current tax system often produces the opposite effect. Over recent decades, tax policies have been gradually moulded to suit the interests of a wealthy minority over the needs of the rest of the population. This trend can in large part be attributed to the considerable influence corporate giants and the super-rich have exerted over national and international tax rules and their success in pressuring governments to reduce tax rates. The extent of this corporate pressure was illuminated by an Oxfam America report exposing that between 2009 and 2015, fifty of the largest U.S. corporations spent $352 million lobbying on tax issues alone. The concrete impact of this lobbying on tax policies is clear: Between 1980 and 2019, the average corporate tax rate around the world fell from 40% to 24%, while in the US, billionaires pay less tax than teachers and nurses. 

ْUnder the guise of boosting investment, countries have also initiated a global race to the bottom by competing with each other to have the lowest and most attractive tax rates. This has encouraged businesses and corporations to shop around for the locations with the best tax deals to conduct their operations, ultimately stripping countries of critical tax revenue to put towards human rights advancements.

Another symptom of this broken tax system is the proliferation of tax abuse, which refers to any practices used by individuals or companies to avoid paying their fair share of taxes, regardless of whether this is through legal loopholes or illegal means. Contemporary manifestations of these abusive practices include, but are not limited to, companies shifting profits earned in a high-tax country to a subsidiary in a tax haven or individuals hiding assets offshore to evade taxes at home. The consequences are such that tax havens alone drain the equivalent of a nurse’s annual salary every second, while tax abuse in all its forms costs the world an estimated 492 billion dollars every year.

These losses have severe implications for human rights. When states are deprived of the revenue needed to fund public services, it becomes untenable for them to meet their legal obligations to provide adequate healthcare, education, housing, social protection, and other essential services. The broad disruption to health services experienced during the COVID-19 pandemic provides an emblematic example of the tragic consequences of underfunded public health systems, especially in lower-income countries, which were hardest hit.

Facing a lack of revenue, countries often resort to adopting austerity measures: cutting public spending, slashing social protections, and privatizing essential services. From a human rights perspective, these measures risk violating principles of non-retrogression, which prohibits backsliding on the realization of rights. 

These consequences are especially severe for women and girls. Research has shown that when public services are rolled back, women step in to fill these gaps by assuming unpaid care roles, locking them in situations of economic precarity by denying them the opportunity to undertake paid work.

The current system, which prioritises regressive over progressive taxation policies, is also damaging from a human rights perspective for its role in exacerbating inequality. As previously mentioned, indirect regressive taxes like VAT take a bigger bite from poorer households, who end up spending a significantly larger portion of their income on essentials like food or hygiene products. Olivier De Schutter, UN special rapporteur on the right to food, highlighted the scale of this issue, reporting that families earning less than minimum wage spend 46% of their income in indirect taxes, while families earning over 30 times the minimum wage only pay around 16%. This issue, too, has a disproportionately harmful impact on women, since they are often the ones responsible for household purchasing, resulting in reduced disposable income and diminished purchasing power. Thus, the elimination of regressive taxes become an essential step in tackling discrimination against women and ensuring their fundamental rights are protected. 

These injustices are even more pronounced in low- and middle-income countries heavily burdened by debt. While international financial institutions (IFIs) such as the International Monetary Fund (IMF) provide loans to support countries in economic crises, they have historically been tied to harmful conditions - notably, increasing regressive taxes like VAT. These increased taxes, however, are directed towards debt repayments rather than the fulfillment of human rights obligations. In 2024, 45 countries spent at least 15% of their government revenue on debt payments. The human rights impact is concrete: Today, 3.3 billion people live in countries that spend more on servicing debt than on health or education. 

Thus, despite their obligation as a UN agency to support states in realizing economic, social, and cultural rights, the IMF endorses regressive taxes that disproportionately burden the poor and divert state resources away from meeting human rights obligations. Between rampant tax abuse and regressive tax policies exacerbated by harmful debt conditions, current tax systems are in urgent need of reform in order to maximise their potential to truly support societies. 

The Road to Tax Justice

To reverse these harmful trends, we must begin to reimagine and reprogram tax systems through a human rights lens. Liz Nelson, Director of Advocacy and Research at the Tax Justice Network and Senior Atlantic Fellow for Social & Economic Equity, emphasizes the ‘4 R’s’ (revenue, redistribution, repricing and representation)—a framework which presents tax not only as a means of raising government funds, but also as a mechanism to reduce inequality, influence harmful market behavior, and strengthen democratic governance. Importantly, these serve as guiding principles for keeping tax policies on track with human rights objectives.  

There is also growing momentum among civil society, academics, and rights-based organizations for a global shift towards tax justice. Notably, the Tax Justice Network—a leading independent international advocacy group working to expose and challenge tax abuse—has developed 6 pillars to combat systemic flaws in current tax regimes, advocating for stronger regulations, greater transparency, and improved cooperation between countries. A major step forward for tax justice has been the proposed UN Tax Convention, which seeks to establish a globally inclusive, transparent, and legally binding framework for international tax cooperation. Unlike existing structures dominated by a few wealthy countries, such as those led by the Organisation for Economic Cooperation and Development (OECD), the UN process aims to ensure that all countries, particularly those in the Global South, have an equal seat at the table. Despite the recent withdrawal of the United States from negotiations, the ongoing process signals a hopeful step toward a fairer and more equitable international tax order.

Conclusion

To conclude, taxation is a powerful and often underestimated force in shaping human rights at the local, national, and international levels. When lacking a human rights framework, tax policies enable the accumulation of vast wealth by a few at the expense of the many, undermine states’ ability to fulfil their human rights obligations, and entrench inequality and discrimination, especially against women and marginalized communities. On the flip side, when tax policies are progressive and fair, they have the transformative potential to remedy these very same challenges. As highlighted by Oxfam, taxing just an additional 0.5% of the wealth of the richest 1% over the next 10 years is equal to investments needed to create 117 million jobs in education and health, and to close current deficits in care work. The blueprint for a just global tax regime is already laid out; what is required now is the global cooperation and political will necessary to harness taxation's potential for meaningfully advancing human rights and equality worldwide.

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Glossary

• Accountability: When institutions or individuals must be answerable for their actions.

• Accumulation: The gradual gathering or increase of something.

• Austerity: Government policies aimed at reducing public spending, often involving cuts to social services.

• Backsliding: Moving backward or worsening

• Binding: Something that is legally enforceable and must be followed.

• Blueprint: A detailed plan or proposal for how to achieve something.

• Contemporary: Modern day.

• Corporate giants:  Very large and powerful companies that often have significant economic and political influence.

• Deficit: The amount that falls short of what is needed or expected.

• Disposable income: The amount of money individuals have left to spend or save after taxes and essential expenses.

• Disproportionately: Too large or too small in comparison to something else.

• Emblematic: Serving as a symbol or example of something, often representing broader issues.

• Entrench: To be firmly established.

• Exacerbating: Making a situation or condition worse.

• Fiscal: Relating to public money, especially taxes and spending. 

• Indispensable: Absolutely necessary, too important to do without. 

• Loophole: A gap or lack of clarity in law that people can take advantage of.

• Manifestation: Clear examples or expressions of something.

• Mechanism: A process to achieve a specific result.

• Mobilise: To gather resources, in this case financial.

• Momentum: The strength or force something gains as it moves forward.

• Multifaceted: Having a range of important features

• Non-retrogression: A human rights principle prohibiting backward steps in the fulfillment of rights already achieved.

• Normative: Relating to norms or standards, especially regarding what is considered acceptable or ideal behavior in society.

• Offshore: Referring to financial activities conducted outside a country’s borders (often in low- or no-tax jurisdictions).

• Precarity: Insecurity or instability, often to describe financial difficulties.

• Privatising: The transfer of ownership or control of public services or assets to private companies.

• Progressive (taxation):  A tax system where the rate increases as the taxpayer's income increases.

• Proliferation: Rapid increase or spread

• Purchasing power: How much money a person has to be able to buy goods and services.

• Rampant: Widespread and difficult to control, particularly in a negative sense.

• Redistribution: The transfer of income or wealth from certain groups to others.

• Regressive (taxation): A tax system that takes a larger percentage from low-income earners than from high-income earners.

• Remedy: A means of correcting or addressing a problem (or injustice).

• Revenue: The income that a government collects, mainly through taxes.

• Scrutiny: Looking at something very closely, critical observation. 

• Stake: A personal interest or involvement in something.

• Status quo: The normal state of affairs. Subsidiary: A company that is controlled by another (parent) company.

• Super rich: Extremely wealthy individuals, typically in the top 1% of income or wealth distribution.

• Tax haven: A country or territory offering low or no tax rates and financial secrecy, (often used to avoid paying taxes in other countries).

• Transformative: Causing a major change or shift in condition, usually for the better.

• Under the guise of: saying something other than what it is really about.

• Untenable: Not possible to maintain.