Global billionaire tax would add $250bn in tax revenues
The calls for a global billionaire tax are by no means new, but recent advocacy among G20 nations means the proposal is quickly becoming a real prospect.
Billionaires who skimp on income tax should be required to pay a minimum 2 per cent wealth tax, ministers of four major economies have said.
The tax would operate alongside the coming minimum multinational corporate tax of 15 per cent and would add an estimated $250 billion in annual global tax revenues despite not applying to those who already contribute a “fair share.”
In a joint op-ed published by The Guardian on Thursday, ministers of Germany, Brazil, South Africa, and Spain said the tax would ensure the wealthiest individuals are paying their “fair share.”
“Global billionaires pay only the equivalent of up to 0.5 per cent of their wealth in personal income tax. It is crucial to ensure that our tax systems provide certainty, raise sufficient revenues, and treat all of our citizens fairly,” they wrote.
“What the international community managed to do with the global minimum tax on multinational companies, it can do with billionaires."
The thinking behind the proposal broadly aligns with the goals of the coming multinational company tax in making it harder for top earners to take advantage of low-tax jurisdictions.
Brazil’s finance minister, Fernando Haddad, urged his counterparts at a G20 meeting last month to endorse the proposal, claiming it was about sustainability as much as fairness.
“We have reached an unsustainable situation in which the richest 1% own 43% of the world’s financial assets and emit the same amount of carbon as the poorest two-thirds of humanity,” he said.
More recently, Brazil and France raised the proposal at a recent meeting of the World Bank and International Monetary Fund in Washington.
Germany’s finance minister Christian Lindner at first rejected the idea, stating “We have an appropriate taxation of income.” Within a week, however, Germany’s minister for economic cooperation and development, Svenja Schulze had signed onto a letter calling for the reform.
French economist Gabriel Zucman is sketching the potential shape and impact of the tax, whose details will be discussed by the G20 in June.
This is not the first time the idea of a billionaire tax has been floated. In Australia, the Greens have been pushing for a 6 per cent wealth tax on billionaires for several years.
In 2021, the Parliamentary Budget Office estimated the tax would add $11,370 million to government revenue over the 2020–21 forward estimates period and would cost the ATO $110 million to administer.
Over a decade it would add $41 billion in tax revenues, though the PBO warned of a “high degree of uncertainty” in its estimates given billionaires would likely seek to avoid paying it.
It would require the establishment of a National Wealth Register to ensure that all billionaires are being held subject to the tax.
Last month, the Greens called on Australia to support the proposal at the G20 summit this year, arguing it would help to account for the “frightening pace” at which the world’s financial elite have grown their net worths in recent years.
“As the gulf between super-wealthy and everyday Australians widens, the need for fair tax policy grows every day,” Greens Senator Nick McKim said.
“While billionaires have seen their fortunes more than doubled since the start of the pandemic, millions of Australians continue to grapple with the cost-of-living crisis.”
"Amid a backdrop of rising inequality and a climate crisis, the global tax on billionaires is a moral necessity.”
