A new report from economist Gabriel Zucman proposes taxing individuals with more than $1 billion in wealth, equal to 2 per cent of their wealth. The report, commissioned by the Brazilian G20 Presidency, states that this billionaire tax could raise $200-$250 billion per year in tax revenue from about 3,000 taxpayers globally while extending the tax to centi-millionaires would generate an additional $100-$140 billion.
This, he said, could be used to support sustained economic development through investments in education, health care, public infrastructure, the energy transition, and climate change mitigation.
According to Zucman, this standard could be flexibly implemented by participating countries through a variety of domestic instruments, including a presumptive income tax, an income tax on a broad notion of income, or a wealth tax.
The report titled ‘A blueprint for a coordinated minimum effective taxation standard for ultra-high-net-worth individuals’ outlined that a common standard has become technically feasible and could be enforced successfully even if all countries did not adopt it by strengthening current exit taxes and implementing “tax collector of last resort” mechanisms as in the coordinated minimum tax on multinational companies.
Zucman notes that this international standard would “effectively address” regressive features of contemporary tax systems at the top of the wealth distribution and would not substitute for but support domestic progressive tax policies by improving transparency about top-end wealth, reducing incentives to engage in tax avoidance, and preventing a race to the bottom.
The report also acknowledges potential challenges associated with the blueprint, including, how to value wealth, and how to ensure effective taxation if some jurisdictions decline to implement this standards.
In addition to this, the report outlines that another challenge is maximising compliance by taxpayers.
“The goal of this blueprint is to offer a basis for political discussions—to start a conversation, not to end it. It is for citizens to decide, through democratic deliberation and the vote, how taxation should be carried out. I hope this report will contribute to this democratic discussion,” said Zucman.
Read the full report here.