MUMBAI: In a landmark report unveiled recently Professor Gabriel Zucman has called for the adoption of a coordinated global minimum tax standard targeting the ultra-rich. This initiative aims to impose a 2% annual tax on the wealth of the world’s 3,000 billionaires, potentially generating an additional $250 billion in global tax revenues. Extending this tax to individuals with a net worth of over $100 million could add between $100 billion and $140 billion annually.
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 G20 Finance Ministers meeting in Rio de Janeiro which is currently ongoing.
“The structural failure of contemporary tax systems has resulted in the wealthiest 0.0001% paying proportionally less in taxes than other socio-economic groups,” Zucman stated. “Progressive taxation is essential for democratic societies, promoting social cohesion and public trust in government efforts for the common good. Ensuring that the ultra-rich pay their fair share is not just fair—it’s essential for protecting our democracies and funding critical public services.”
The report’s proposal builds on recent advances 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 due to increased information exchange between countries. These developments, Zucman argues, have paved the way for successfully implementing a global minimum tax on the ultra-wealthy.
The G20 proposal follows from detailed work conducted by the UN tax committee, whose Subcommittee on Wealth and Solidarity Taxes is now preparing a model wealth tax law to support the introduction of national wealth taxes. In addition, the ongoing negotiations at the Ad-Hoc Committee to Draft Terms of Reference for a UN Framework Convention on International Tax Cooperation, composed of all UN member countries, has identified taxation of high net-worth individuals as a core element and is likely to include this in the terms of reference for the full negotiations to come.
Brazilian finance minister Fernando Haddad praised the proposal, emphasizing the importance of ensuring that everyone pays their fair share of taxes. “The Brazilian G20 Presidency has prioritized international tax cooperation, advocating for a system where a few thousand individuals can finance actions that positively impact billions,” Haddad said. “This proposal is fair from social, economic, and political standpoints, and it benefits from world-class analytical research.”
The report highlights the disproportionate economic and political power held by billionaires, who, despite being a minuscule fraction of the population, significantly influence large corporations, media, and policymaking. Since the 1980s, tax distortions have allowed the ultra-rich to avoid substantial income taxes by structuring their wealth in ways that minimize taxable income.
Zucman suggests that the proposed 2% global minimum tax could be implemented without requiring a multilateral treaty. Participating countries could use various domestic instruments to enforce the standard, ensuring that even billionaires relocating to non-participating countries would still be subject to the tax.
Public opinion strongly supports curbing tax injustices, with a global survey conducted by IPSOS indicating that 67% of adults in G20 countries believe economic inequality is excessive and 70% think the rich should pay higher taxes. In the UK, South Africa, and Kenya, this percentage rises to 78%, states the report.
“The goal of this report is to start a global political conversation, not to end it,” Zucman concluded. “After the progress of the last fifteen years in tax transparency and multinational taxation, the time is ripe for this new form of international cooperation.”
Republished. Link to Original Article: https://timesofindia.indiatimes.com/business/india-business/a-global-agreement-on-taxing-the-ultra-rich-is-technically-feasible-states-g20-commissioned-report/articleshow/111312750.cms