G20 Report Backed by Brazil Calls for Global Wealth Tax

June 26, 2024 by No Comments

A new report commissioned by Brazil, the current chair of the Group of Twenty (G20), proposes a global tax on the world’s wealthiest individuals. The report, authored by Gabriel Zucman of the Paris School of Economics, recommends a 2% income tax on individuals with assets exceeding $1 billion.

The report highlights that global billionaires currently pay an average of 0.3% of their wealth in taxes. Zucman argues that a 2% tax would generate $200 to $250 billion annually, impacting approximately 3,000 individuals. This revenue could be utilized to fund essential public services such as education, healthcare, and climate change mitigation.

“The super-rich pay proportionally less in taxes than other socioeconomic groups,” Zucman stated to journalists, emphasizing the detrimental effect of this disparity on inequality. He underscored the significance of a progressive tax system as a “key pillar of our democratic societies,” crucial for fostering social cohesion and trust in governance.

The report reveals that billionaires currently own 13% of global GDP, a stark increase from 3% in 1987.

The proposed tax would be levied on billionaires who do not already pay the equivalent of 2% of their wealth in income tax. While acknowledging that most billionaires likely fall below this threshold, Zucman noted the difficulty in attaining precise figures.

Several countries, including (a new G20 member), Belgium, Colombia, France, and Spain, have expressed support for the proposal.

Addressing inequality is a priority for Brazil during its G20 presidency, alongside efforts to reduce hunger, promote sustainable development, and reform global governance. Felipe Antunes de Oliveira of Brazil’s Finance Ministry described a global minimum tax on billionaires as a potential source of funding for these initiatives.

Oliveira acknowledged the complexities of implementing such a tax. “We can expect the negotiations to be long,” he remarked, echoing similar sentiments expressed by Finance Minister Fernando Haddad in February during initial discussions in .

The gap between the super-rich and the broader global population has widened since the COVID-19 pandemic, according to Oxfam International, which commended the report.

“This is a sensible and serious proposal that is in every government’s strategic economic interest,” interim executive director Amitabh Behar stated in a press release.

A 2023 study conducted by Tax Justice Network, an advocacy group, reveals that nations worldwide could lose up to $4.8 trillion in tax revenue over the next decade due to tax havens utilized by individuals and businesses.