Billionaires Are Next Up in Crosshairs of Global Tax Architects
Copyright Matt Cardy, Getty Images Wealth Planning>High Net Worth Billionaires Are Next Up in Crosshairs of Global Tax Architects Applying a 2% rate to the wealth of the world’s 2,750 billionaires could raise some $250 billion a year. (Bloomberg) -- Governments should create a global minimum tax on the super-rich similar to a system agreed for major multinationals to deliver a significant boost to revenues, the EU Tax Observatory said.
Applying a 2% rate to the wealth of the world’s 2,750 billionaires could raise some $250 billion a year, according to research published by the independent network of academics based at the Paris School of Economics.
“Glaring tax disparity undermines the proper functioning of our democracy; it deepens inequality, weakens trust in our institutions, and erodes the social contract,” economist Joseph Stiglitz said in a forward to the report. “What we asked of corporations we now must ask of billionaires. It is time to establish a global minimum tax on the very rich.”
The study adds to a drumbeat of calls to ramp up taxation of the super-rich. In 2020, US Senators Elizabeth Warren and Bernie Sanders ran in the Democratic primaries promoting the idea of a levy on the accumulated wealth of the richest Americans.
Last year, US President Joe Biden proposed a levy with a narrower scope, based on income and unrealized capital gains. The US Congress never approved this and is unlikely to consider it as long as Republicans control the House.
Economists and non-governmental organizations have also petitioned Group of 20 leaders to create new regimes at national and international levels to better target fortunes. In the US, there is even a collective of the super-wealthy known as the Patriotic Millionaires that formed in 2010 to demand the end of tax cuts. Prominent members include Walt Disney Co. heiress Abigail Disney and Men’s Wearhouse founder George Zimmer.
The EU Tax Observatory, which lobbied for a minimum rate for the largest multinationals, estimates that billionaires are subject to personal effective tax levels of just 0% to 0.5% of their wealth. Based on 2021 figures, setting a floor at 2% would add another $214 billion to the $44 billion they currently pay to governments.
Read More on Global Tax:
How Biden’s Billionaire Minimum Income Tax Would Hit the Wealthy
Global Tax Deal Advances in Race to Avoid Digital Levies Spat
How the 15% US Minimum Corporate Tax Would Work: QuickTake
According to the researchers, billionaires tend to pay low effective rates in part because they can use holding companies to avoid income tax. Taking the examples of France, the US and the Netherlands, they say this contributes to a sharp decline in average rates at the very top of the earnings scale.
Setting a globally agreed minimum level based on wealth would be the best reference point because income flows are not as well defined as the market values of assets, the EU Tax Observatory said.
The system could ultimately include other rich people, but starting with billionaires would be easier to implement as a first step, it added. This may also be more straightforward than it was for companies because there is less disagreement about which jurisdictions would collect the revenue.
It took years of negotiations to create a 15% minimum rate for corporations and even now there remain significant questions regarding the implementation of a broad global deal.
There are also other challenges to implementing a minimum tax based on wealth, notably difficulties assessing the valuation of private businesses, the EU Tax Observatory said.
Still, the network of academics is optimistic.
“Since countries have been able to reach an agreement for multinationals — long deemed Utopian — an agreement on a minimum tax for the wealthy is not a priori impossible,” it said.
TAGS: Individual Wealth 0 comments Hide comments
Comment * Switch to plain text editorMore information about text formats
Text format CommentsPlain text Comments- Allowed HTML tags: <em> <strong> <blockquote> <br> <p>
- No HTML tags allowed.
- Web page addresses and e-mail addresses turn into links automatically.
- Lines and paragraphs break automatically.
- Load More
- Next Article
- Previous Article
Owl Media Group takes pride in providing social-first platforms which equally benefit and facilitate engagement between businesses and consumers and creating much-needed balance to make conducting business, easier, safer, faster and better. The vision behind every platform in the Owl Media suite is to make lives better and foster a healthy environment in which parties can conduct business efficiently. Facilitating free and fair business relationships is crucial for any thriving economy and Owl Media bridges the gap and open doors for transparent and successful transacting. No advertising funds influence the functionality of our media platforms because we value authenticity and never compromise on quality no matter how lucrative the offers from advertisers may seem.
Originally posted on: https://www.wealthmanagement.com/high-net-worth/billionaires-are-next-crosshairs-global-tax-architects