A Milestone Discussion at G20: Global Minimum Tax for Billionaires

In a historic move, the G20, comprising the world’s most influential nations, is set to deliberate on a groundbreaking proposal — a global minimum tax on billionaires. Leaders gathered to address the challenges posed by hypermobile super-rich individuals who have been paying less in taxes than the average population.

Billionaires Taxes

Using holding companies, offshore trusts, and other intermediate structures, most billionaires are able to pay a much lower rate of tax as a proportion of their income than the rest of the population. The EU Tax Observatory, which is funded by the EU, estimates they pay the equivalent of 0-0.5% of their wealth in personal income taxes.

Plan and Goal

The primary objective is to put an end to the “race to the bottom” that allows billionaires to exploit tax loopholes. The plan builds on the success of the 15% global minimum tax on multinational companies that came into effect in January, showcasing increased global collaboration to combat tax avoidance.

The EU Tax Observatory, a Paris-based thinktank, set out a mechanism for a global wealth tax in a report last year. It called for a 2% annual levy on the wealth of the world’s richest individuals as the starting point for a global minimum tax.

It estimates the measure could raise $250bn a year from the 2,756 known billionaires, who together are believed to be worth $13tn.

The idea is what we have been able to achieve with multinational firms – putting a floor to their effective tax rates – we should do the same for super-rich people.

Tax justice campaigners have described the discussions in Brazil as a pivotal moment. Oxfam’s tax policy lead, Susana Ruiz, said: “Just getting this on to the agenda at the G20 is a historic step.”

Conclusion

While the discussions on a global minimum tax for billionaires mark a historic step, the path forward may be challenging. Some countries are still reluctant to embrace higher taxes, and the delicate global political landscape adds complexity. Nevertheless, there is growing recognition of the need for international cooperation in taxing the super-rich. As discussions unfold, the world anticipates a potential breakthrough that could reshape the taxation landscape.

 

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