Forbes puts a target on the rich

Staggering. That’s the only word that can describe the increase in the total wealth of the 1,200 members of the Forbes billionaires list.

In the last 12 months – in a year when most major global economies struggled to grow – the world’s richest people increased their total wealth from $3.4 trillion to a record $4.5 trillion, with the average wealth on the list climbing from $3.5 billion to $3.7 billion.

The economies of Britain, the United States and most of Europe might be mired in debt and unemployment, but for the rich it’s like the GFC never happened.

Indeed, most entrepreneurs find themselves in better shape than before the 2008 craziness. They’ve reduced their debt, rebalanced their portfolios towards less risky assets and scooped up bargain assets along the way.

Carlos Slim is a great example. His fortune – which stood at $35 billion in 2009 – grew a whopping $20.5 billion in the last 12 months to sit at $74 billion. Surging sharemarkets, a stronger peso and a string of mergers and acquisitions have turned Slim into the king of the Americas. He is now a staggering $18 billion ahead of his nearest wealth rival, Bill Gates, who has $56 billion.

Another great example is Europe’s richest person, Bernard Arnault, who is the chief executive and largest shareholder of luxury goods company LVMH, which sells everything from Louis Vuitton bags to Dom Perignon champagne and Royal Van Lent yachts.

His fortune climbed $13.5 billion to $41 billion thanks to a sharp rise in LVMH’s share price. In the last six months, the company has expanded its portfolio of brands by buying stakes in Hermès and Bulgari.

Arnault is the perfect example of why there huge increases in the wealth of these billionaires will not sit well with everyone.

You could understand there would be some that would be unhappy with the idea that Europe’s richest man – and one who makes his fortune selling luxury products to other wealthy people – could increase his fortune by just under 50% when many European countries are flirting with financial failure.

Regardless of whether you celebrate the rise of these rich entrepreneurs or not, the fact is that their ability to recover so quickly from the GFC is likely to increase the size of the tax target on the rich.

The wealthy have already been hit with higher taxes in Britain and other parts of Europe, and there are many who want to see these taxes increased.

In Britain, for example, a protest group called UK Uncut, has targeted billionaire Sir Philip Greene, (whose retail empire Arcadia is behind such brands as Topshop, Topman, Dorothy Perkins, Burton, Miss Selfridge and British Home Stores) with accusations that he has dodged hundreds of millions in tax.

In America – where a deal between President Obama and the Republicans to extend Bush-era tax cuts has been decried as giving the rich a free kick – there is also a backlash against the rich.

In late January, a poll commissioned by television program 60 Minutes and Vanity Fair magazine shows 61% of respondents would use tax increases for the rich to balance the US budget ahead of three other options: cutting defence spending, cutting Medicare or cutting social security. Even wealthier respondents appear to back the plan – 46% of Americans earning more than $US100,000 said tax hikes for the rich were the best option for bringing the US deficit under control.

Over the next decade, governments around the world will be searching and struggling for ways to bring their budgets back into shape.

Thanks to the Forbes list – and the incredible recovery of the rich – they know where to look to starting filling those budget holes.