International scheme to tax billionaires’ wealth technically feasible, study finds

BRAZIL – An international scheme to tax the wealth of the world’s 3,000 billionaires is technically feasible and could net up to $250bn (£197bn) a year in extra revenue, a new report says.

A study by the French economist Gabriel Zucman concluded that progress in finding ways to tax multinational corporations meant it was now possible to levy a global tax on individuals – even if not every country agreed to take part.

Zucman prepared the report after being invited by Brazil – which now holds the presidency of the G20 group of developed and developing nations – to examine ways of increasing the low levels of tax currently paid by the super-rich.

French economist Gabriel Zucman said valuing the wealth of billionaires would be relatively simple, as most of it was held in the form of shares. Photograph: Eduardo Muñoz/Reuters

“There is overwhelming public support for this idea,” Zucman said at the report’s launch. “Ten years ago, nobody believed 130 countries would support a minimum tax on multinationals. It was thought of as utopian.”

The report said billionaires were currently paying an average of 0.3% tax on their wealth – less than the rates paid by workers. Zucman said the average wealth of the top 0.0001% of individuals had grown by 7.1% a year on average between 1987 and 2024, increasing the share of global wealth of billionaires from 3% to 14%.

Describing his plan as a top-up to income tax so that billionaires paid an annual tax bill worth at least 2% of their wealth, Zucman said progressive taxation was a “key pillar of modern societies”.

International cooperation was needed to prevent a “race to the bottom”, he said, but it was not necessary for every country to sign up for the idea to get off the ground. The US opposes a global tax on wealth, although Zucman said Joe Biden’s budget proposal to tax America’s super-rich was consistent with his plan.

Zucman said valuing the wealth of billionaires would be relatively simple because most of it was held in the form of shares. His report said it could be enforced successfully even if all countries did not adopt it, by strengthening current exit taxes (levies on rich people taking their money to a non-participating jurisdiction) and implementing “tax collector of last resort”.

This would involve extending to individuals’ rules that allow participating countries to tax non-participating countries’ undertaxed multinationals.

The proposal will be discussed at next month’s G20 meeting of finance ministers in Rio de Janeiro.

Oxfam International’s interim executive director Amitabh Behar said: “This is a sensible and serious proposal that is in every government’s strategic economic interest. All G20 countries should support Brazil’s push to secure the first-ever global deal to tax the super-rich.”

Phil White, member of Patriotic Millionaires UK, said: “Zucman’s report shows that a coordinated, international approach to taxing the super-rich is the sensible and fair way to address the extreme concentration of wealth.

“Addressing billionaire wealth should be viewed as the initial step; if we aim to safeguard democracy from the corrosive effects of extreme wealth, then multimillionaires like me should also be prepared to pay more – and take pride in contributing their fair share.”

Extending the plan to those with wealth in excess of $100m (£79m) would raise an additional $100bn-$140bn (£79bn-£110bn) a year, Zucman said.

Larry Elliott
25 June 2024