Coalition to further tax ultra-rich across the world gains momentum

August 9, 2024 in Business, Companies, Finance, Policy by Editor

The world’s most influential finance leaders vowed to work together toward effectively taxing the ultra-rich, but stopped short of agreeing on how to do so at a meeting in Rio de Janeiro recently.

Globally on top is Elon Musk, the Tesla Inc, Space X and X social media platform majority shareholder. He is currently worth just over $200 billion while Africa’s wealthiest individual, Alio Dangote, is estimated to have a net worth of under $14 billion.

The finance ministers and central bankers from the Group of 20 major economies said that “ultra-high-net-worth individuals” should “contribute their fair share in taxes. No one should be able to evade taxation, including by circumventing transparency standards,” the declaration said.

As the 2024 host of the G20 forum, Brazil has made taxing the ultra-rich its cause célèbre, commissioning economist Gabriel Zucman to create a blueprint for a global scheme to tax billionaires’ wealth — an idea once dismissed as “utopian,” he said.

In his report, Zucman estimated that a coordinated push by governments to tax the world’s approximately 3,000 billionaires 2% of their wealth would generate between $200 and $250 billion a year. He said extending the proposed minimum tax rate to ‘centi-millionaires’, whose estimated wealth exceeds $100 million, would raise an additional $100 billion to $140 billion.

Several countries in Europe, Latin America and Africa backed Brazil’s call for a global minimum wealth tax, similar to the global minimum tax rate for multinational corporations agreed to by more than 130 countries in 2021. However, the United States and Germany were key holdouts.

The US Treasury Secretary Janet Yellen later told reporters, “(Tax) policy is very difficult to coordinate globally and we don’t see a need or really think it’s desirable to try to negotiate a global agreement on that. We think that all countries should make sure that their taxation systems are fair and progressi

While no agreement was reached during the finance leaders’ meeting on July 25 and 26, their joint declaration noted that improved cooperation between G20 members could “involve exchanging best practices, encouraging debates around tax principles, and devising anti-avoidance mechanisms, including addressing potentially harmful tax practices.”

Longtime advocates for the global minimum wealth tax, including Nobel laureate Joseph Stiglitz, also wants the G20 to go further. Stiglitz, who co-chairs the Independent Commission for the Reform of International Corporate, a group of top economists, suggested the United Nations was the appropriate forum to continue the discussion. For decades, the Organisation for Economic Co-operation and Development, representing mostly high-income countries, has set the global tax agenda. But negotiations over a UN framework convention on tax, which could shift power away from the OECD, are now underway in New York.

ICIJ