Global tax on billionaires would bring 40 billion euros to Europe, says report

Shyly mentioned by the French government, a global tax of 2% on the assets of billionaires would generate 40 billion euros in revenue for European states, according to a report published by the European Tax Observatory on Monday October 23. “Billionaires around the world have effective tax rates ranging from 0 to 0.5% of their wealth, due to the frequent use of shell companies to evade income tax”, deplores this center led by the French economist Gabriel Zucman. The Observatory proposes to establish a global minimum tax on the assets of some 2,800 billionaires, the rate of which would be set at 2%.

The principle of this levy is reminiscent of that of the minimum tax of 15% on corporate profits, which is gradually being deployed across the world after the conclusion of an international agreement under the aegis of the OECD, at the end of 2021. Currently , European billionaires only pay six billion dollars in taxes per year, assures the Observatory, financed in particular by the European Union. But by taxing their assets at 2%, these tax revenues could increase sevenfold to reach 42.3 billion dollars (40 billion euros) in Europe – and more than 200 billion euros globally.

The French government rules out any new national tax on the wealth of the wealthiest, judging that such a levy must be decided at the European or international level. But in September, the French Minister for Public Accounts Thomas Cazenave said he wanted to create a “transpartisan working group” to think about international personal taxation.

A “weakened” minimum corporate tax, deplores the Observatory

In its report which takes stock of recent reforms to the international tax system, the Observatory welcomes the success of the automatic exchange of banking information, in force since 2017. While “the major part” of financial wealth placed by households in tax havens was not declared to the tax authorities before 2013, ten years later only around 25% of this wealth “escapes tax”.

The global minimum corporate tax, on the other hand, was “considerably weakened”, regrets the hundred researchers who contributed to the report. Indeed, the agreement negotiated at the OECD contains an exemption which allows companies to exclude part of their assets and their payroll from the tax base. Their real tax rate therefore falls significantly below the 15% theoretically planned. The Observatory therefore suggests raising the tax rate from 15% to 25%, which would generate a “almost tripling” tax revenue.