In a groundbreaking report presented by Professor Gabriel Zucman, a call has been made for the implementation of a coordinated global minimum tax standard aimed at the ultra-rich. This initiative proposes a 2% annual tax on the wealth of the world’s 3,000 billionaires, potentially generating an additional $250 billion in global tax revenues. Expanding this tax to individuals with a net worth exceeding $100 million could yield an annual increase of $100 billion to $140 billion.

The report, titled ‘A Blueprint for a Coordinated Minimum Effective Taxation Standard for Ultra-High-Net-Worth Individuals’, was commissioned by the Brazilian presidency of the G20 in preparation for the ongoing G20 Finance Ministers meeting in Rio de Janeiro.

“The current tax systems have failed structurally, leading to the top 0.0001% paying less in taxes compared to other societal groups,” Zucman emphasized. “Progressive taxation is vital for democratic societies, fostering social cohesion and public trust in governmental efforts for the common good. Ensuring that the ultra-rich contribute their fair share is not only just but imperative for safeguarding our democracies and funding essential public services.”

The proposed global minimum tax aligns with recent advancements in international tax cooperation, including the adoption of a 15% minimum tax on multinational corporations by over 130 jurisdictions in 2021 and the significant reduction in offshore tax evasion through enhanced information exchange between countries. Zucman argues that these advancements lay the groundwork for the effective implementation of a global minimum tax targeting the ultra-wealthy.

The G20’s proposition is a result of extensive research conducted by the UN tax committee, with the Subcommittee on Wealth and Solidarity Taxes currently drafting a model wealth tax law to facilitate the introduction of national wealth taxes. Moreover, the ongoing negotiations at the Ad-Hoc Committee for the UN Framework Convention on International Tax Cooperation have identified the taxation of high-net-worth individuals as a fundamental component, likely to be included in the forthcoming negotiations’ terms of reference.

Brazilian finance minister, Fernando Haddad, commended the proposal, underscoring the significance of ensuring equitable tax contributions from all individuals. “The Brazilian G20 Presidency prioritizes international tax cooperation, advocating for a system where a few thousand individuals can finance initiatives that positively impact billions,” Haddad remarked. “This proposal stands as fair from social, economic, and political perspectives and benefits from top-tier analytical research.”

The report sheds light on the disproportionate economic and political influence wielded by billionaires, who, despite constituting a minute fraction of the populace, hold substantial sway over major corporations, media outlets, and policymaking. Tax loopholes since the 1980s have enabled the ultra-rich to evade significant income taxes by structuring their assets to minimize taxable income.

Zucman proposes that the 2% global minimum tax could be enforced without necessitating a multilateral treaty; participating nations could utilize various domestic mechanisms to uphold the standard, ensuring that even billionaires relocating to non-participating countries remain subject to the tax.

Public sentiment strongly favors rectifying tax inequities, with a global survey by IPSOS indicating that 67% of adults in G20 nations believe economic inequality is excessive and 70% opine that the wealthy should bear higher tax liabilities. In the UK, South Africa, and Kenya, this percentage further rises to 78%, as per the report.

“The objective of this report is to ignite a global political dialogue, not conclude it,” Zucman concluded. “Given the advancements in tax transparency and multinational taxation over the past fifteen years, the time is ripe for this new form of international collaboration.”