The Global Call for a Minimum Tax on Billionaires
In a groundbreaking report released recently, Professor Gabriel Zucman is advocating for the implementation of a coordinated global minimum tax targeting the ultra-rich. This proposal suggests imposing a 2% annual tax on the wealth of the world’s 3,000 billionaires, which could potentially generate an additional $250 billion in global tax revenues. Expanding this tax to individuals with a net worth exceeding $100 million could result in an annual influx of between $100 billion and $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 failure of contemporary tax systems has led to the richest 0.0001% paying a lower proportion of taxes compared to other socio-economic groups,” Zucman emphasized. “Progressive taxation is crucial for democratic societies, fostering social cohesion and public trust in government efforts for the common good. Ensuring that the ultra-rich contribute their fair share is not just equitable—it is vital for safeguarding our democracies and financing essential public services.”
Zucman’s proposal builds on recent advancements in international tax cooperation, such as the adoption of a 15% minimum tax on multinational corporations by over 130 jurisdictions in 2021, and the significant reduction in offshore tax evasion stemming from increased information exchange between countries. These developments, according to Zucman, create a conducive environment for successfully instituting a global minimum tax on the ultra-wealthy.
The G20’s proposal stems from meticulous work undertaken by the UN tax committee, with its Subcommittee on Wealth and Solidarity Taxes presently crafting a model wealth tax law to facilitate the introduction of national wealth taxes. Moreover, negotiations at the Ad-Hoc Committee to Draft Terms of Reference for a UN Framework Convention on International Tax Cooperation, comprising all UN member countries, have identified taxation of high net-worth individuals as a fundamental component likely to be included in the terms of reference for forthcoming negotiations.
Brazilian finance minister Fernando Haddad lauded the proposal, underscoring the significance of ensuring that everyone contributes their fair share of taxes. “The Brazilian G20 Presidency has prioritized international tax cooperation, advocating for a system where a few thousand individuals can fund actions that benefit billions,” Haddad remarked. “This proposal is equitable from social, economic, and political perspectives, underpinned by world-class analytical research.”
The report draws attention to the disproportionate economic and political influence wielded by billionaires, who, despite constituting a minute fraction of the population, exert significant sway over large corporations, media, and policymaking. Tax loopholes since the 1980s have enabled the ultra-rich to evade substantial income taxes by structuring their wealth to minimize taxable income.
Zucman posits that the proposed 2% global minimum tax could be enforced without necessitating a multilateral treaty. Participating countries could deploy various domestic tools to uphold the standard, ensuring that even billionaires relocating to non-participating nations remain subject to the tax.
Public sentiment strongly favors addressing tax inequities, with a global survey by IPSOS revealing that 67% of adults in G20 countries perceive economic inequality as excessive, and 70% believe the affluent should shoulder higher tax burdens. In the UK, South Africa, and Kenya, this sentiment rises to 78%, as per the report.
“The objective of this report is to initiate a global political dialogue, not conclude it,” Zucman concluded. “Following the strides made in tax transparency and multinational taxation over the last fifteen years, the time is propitious for this new form of international cooperation.”
