Elon Musk, Jeff Bezos and other ultra-rich in points? Economist Says ‘No Back’ to Billionaires’ 2% Minimum Tax Proposal

As the wealthy exercise their power and gain a disproportionate share of global wealth, an economist said Tuesday that the proposed minimum tax on billionaires could soon become a reality.

Paying the fair share: The concentration of wealth has become a “global” and “alarming” problem, it said Gabriel Zucman, Professor of economics at the Paris School of Economics and the University of California, in an opinion article contributed to Project Syndicate.

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Citing statistics, the economist said that just 3,000 people now boast a fortune of $14.4 trillion, which is equivalent to 13 percent of the world’s GDP. This compares with a much smaller 3% of GDP share of their wealth in 1993, he added.

Zucman also pointed out “two striking similarities” between these ultra-rich. “The vast majority are men; and they typically pay much less in taxes as a share of their income than their employees and middle-class workers in general,” he said.

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The severity of the problem prompted the G20 to address it in a meeting held in Rio de Janeiro last month, as the final statement called for “all taxpayers, including ultra-high net worth individuals, to contribute their fair share of taxes. “, said the economist. “Aggressive tax evasion or tax evasion by very high net worth individuals can undermine the fairness of tax systems,” the grouping of the world’s largest developed and emerging nations said in the statement, he added.

Arguing why the wealthiest should pay their fair share of taxes, Zucman said that without sufficient tax revenue, governments would be prevented from guaranteeing adequate services such as education, health care and social protection nor can they answer much larger problems. such as the climate crisis.

The economist noted the results of an Ipsos poll of G20 countries which showed that 67% of people agree that there is too much economic inequality and 70% support the principle that rich people should pay higher rates of income tax.

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The minimum tax on the agenda: While the Rio declaration signaled a significant shift in recognition that the ultra-rich must pay their fair share of taxes, there was no political consensus on the 2% minimum tax on billionaires and it did not make it into the final text , Zucman said. “The declaration had to be approved unanimously, and some countries still have reservations about some aspects of the proposal,” he said.

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The economist, however, believes that “there is no turning back”. “The minimum tax is now on the agenda and, looking at the history of international tax negotiations, there are concrete reasons to be optimistic about the future of the proposal,” he said. He noted that in 2013, the G20 recognized the need to reduce tax evasion by multinational companies, and in October 2021, 136 countries and territories adopted a minimum corporate tax of 15% and 15%.

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Not all countries need to adopt a 2% minimum tax on billionaires, “we simply need a critical mass of countries to agree on a set of rules that identify and assess the wealth of the ultra-rich and adopt tools that it imposes effective taxation regardless of the tax residency of billionaires,” Zucman said.

“In this way, we can avoid a scenario where the ultra-rich flee to tax havens, thus ending the race to countries competing to give billionaires the lowest tax rate.”

Why it’s important: The billionaire tax proposal was discussed in the US by the president Joe Biden’s administration in accordance with the agenda of the Democratic Party to identify additional sources of funding to finance government spending. But it was met with opposition from some of the wealthiest.

In a March 2023 post on X, formerly Twitter, Biden said billionaires pay an average of 3 percent in taxes. “Look, I think you should be able to be a billionaire if you can earn it, but you’re just paying your fair share. I think you should pay a minimum tax of 25%,” he said.

See also: How do billionaires pay less income tax than you? Tax deferral is their number one strategy.

Zucman said in a New York Times op-ed earlier this year that billionaires like it Amazon’s Jeff Bezos and Elon Musk from Tesla they pay the least taxes relative to the amount of money they earn because they live off their wealth, unlike the common man who lives off wages.

If Amazon gave its profits to shareholders in the form of dividends, which are subject to income tax, Bezos would have to pay a huge tax, he said.

“Unless Mr. Bezos, Warren Buffett or Elon Musk sell their shares, their taxable income is relatively tiny. But they can still make amazing purchases by borrowing from their assets,” he said.

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