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Thursday, July 25, 2024

Failure to tax world’s richest means global tax needed—report

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Paris, France—The failure of rich countries to tax the world’s billionaires has made it necessary to introduce a global minimum tax rate on the world’s richest, argued a G20-commissioned report published on Tuesday.

The idea of a global tax on the richest is already supported at the G20 by Brazil, France, Spain and South Africa—although the United States has opposed it.

Tuesday’s report by economist Gabriel Zucman calls for a coordinated minimum tax standard for ultra-high net worth individuals, arguing “the very wealthy benefit from a gigantic tax privilege.”

“They pay much less in tax than all other social categories,” he told Agence France Presse (AFP).

Modern tax systems fail to tax very wealthy individuals adequately, the report found, because they are taxed mostly on income rather than wealth.

“These individuals can shield virtually all their income from the income tax, because for them virtually all income derives from their ownership of businesses,” said Zucman in the report.

He proposes billionaires should pay a minimum global tax rate equal to at least two percent of their wealth annually.

This would raise $200-$250 billion per year in tax revenue from around 3,000 taxpayers globally.

Zucman’s report puts the current tax rate on billionaires at just 0.3 percent of their wealth.

Better taxing of the rich would reduce “incentives for the wealthiest individuals to engage in tax avoidance” and help the “fight against inequality,” the report argues.

Investigative media ProPublica reported in 2021 that several billionaires, including the former boss of Amazon Jeff Bezos and Tesla chief Elon Musk, paid little or nothing in terms of taxes on their total wealth.

ProPublica says the billionaires in its report did nothing illegal in their tax declarations, but employed tax-avoidance strategies “beyond the reach of ordinary people.”

Alex Cobham, chief executive of the UK-based NGO Tax Justice Network, said he welcomed the G20’s support for the principle of wealth taxation.

“Wealth taxes are vital tools to curb the damaging, extreme inequalities our societies face, and to raise revenue to support wider social progress,” he said.

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