Brazil-backed G20 report calls for global, wealth-based income tax

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A global tax on the super-rich is proposed in a new report that Brazil commissioned for its current presidency of the leading 20 rich and developing nations.

Individuals with more than $1 billion in total assets would be required to pay the equivalent of 2% of their wealth in income tax, according to the proposal in the report by Gabriel Zucman, a French economist who teaches at the Paris School of Economics.

The report says global billionaires currently pay the equivalent of 0.3% of their wealth in taxes. It said a 2% tax would raise $200 billion to $250 billion per year globally from about 3,000 individuals — money that could fund public services such as education and healthcare as well as the fight against climate change.

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“The super-rich pay proportionately less in taxes than other socioeconomic groups,” Zucman told journalists, adding that the practice fuels inequality. He called a progressive tax system a “key pillar of our democratic societies,” essential for strengthening social cohesion and trust in governments.

In wealth, billionaires currently own the equivalent of 13% of the world’s GDP, up from 3% in 1987, according to the new report.

NEWPORT, RI – JULY 15: The national flag of Brazil waves in the wind during the Infosys Hall of Fame Open on July 15, 2022, at the International Tennis Hall of Fame in Newport, RI. (Photo by Erica Denhoff/Icon Sportswire via Getty Images)

The proposed tax would target billionaires who do not already pay the equivalent of 2% of their wealth in income tax, the report said. Most global billionaires probably pay below 2% but it is difficult to be more precise, Zucman said.

New G20 member the African Union has expressed interest in the proposal, as well as Belgium, Colombia, France and Spain, he said.

The issue of inequality is a priority for Brazil in its G20 presidency, along with the reduction of hunger, the promotion of sustainable development and reforms of global governance.

A global minimum tax on billionaires is one way of raising funds to make progress on those agendas, Felipe Antunes de Oliveira with Brazil’s Finance Ministry told journalists.

He acknowledged that the way ahead would be far from smooth.

“We can expect the negotiations to be long,” Oliveira said, echoing similar remarks by Finance Minister Fernando Haddad in February when the proposal was first discussed in São Paulo.

The gap between the super-rich and the bulk of the global population has grown since the coronavirus pandemic, according to anti-poverty organization Oxfam International, which praised the new report.

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

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According to a 2023 study by advocacy group Tax Justice Network, countries around the world could lose up to $4.8 trillion in tax revenue over the next decade due to the use of tax havens by individuals and businesses.