Report commissioned by the G20 | A global minimum tax on the richest to remedy “tax privilege”

(Paris) The failure of rich countries to tax billionaires has made it necessary to establish a global minimum tax, says economist Gabriel Zucman in a report commissioned by the G20 where he details how it could be implemented .

The philosophy of a global tax on the richest is already supported at the G20 by Brazil, France, Spain and South Africa. The United States, however, was against it.

“The very wealthy benefit from a gigantic tax privilege, they pay much less in tax than all other social categories,” declared Gabriel Zucman, author of the report published Tuesday at the request of the presidency, in an interview with AFP. Brazilian G20.

The main reason is due to tax systems: they tax income more than wealth, and the latter has constituted the bulk of the wealth accumulation of the wealthiest in recent decades.

The Zucman report puts the current tax rate on billionaires at 0.3% of their wealth. The latter has exploded: the wealth of the wealthiest 0.0001% of households has increased from 3% of global GDP in 1987 to nearly 14% today, calculated the professor at the Paris School of Economics and the University of Berkeley in California.

Less taxes than a teacher

“Almost no one can agree with a situation where the most favored taxpayers, […] those who have benefited the most from globalization have the right to pay less than teachers and firefighters,” Mr. Zucman, a specialist in inequalities, told AFP.

In 2021, the investigative media ProPublica had already revealed that several billionaires, including Amazon founder Jeff Bezos and Tesla founder Elon Musk, today the two richest men in the world, had in certain years paid little or nothing taxes on their total wealth, made up largely of shares in their companies and not just their income.

“The income tax, which in principle constitutes the main instrument of tax progressivity, does not effectively tax very wealthy people,” summarizes the report.

He proposes creating a 2% tax on the fortunes of some 3,000 billionaires in the world, which could bring in between 200 and 250 billion dollars each year.

Concretely, an individual whose fortune would be estimated at 40 billion dollars would have to pay a tax of 800 million euros each year, if his income tax has not already reached this level, in which case he would not I wouldn’t have to pay it.

Extended to people whose fortune ranges between $100 million and $1 billion, this tax could bring in $100 to $140 billion more, the study estimates.

“More difficult to handle”

“The wealth tax is an essential tool for reducing the extreme and harmful inequalities that our societies face,” reacted Tuesday Alex Cobham, head of the NGO Tax Justice Network.

For the NGO Oxfam, “the fact that governments take the taxation of the ultra-rich seriously shows that the policy […] finally joins the public’s aversion” towards people “who have avoided paying their fair share of taxes for far too long”.

The level of taxation of billionaires “must be evaluated in light of the rate of return on wealth before tax”, further analyzes Mr. Zucman, who put it at 7.5% on average per year, net of inflation, over the last four decades, thanks to an explosion in stock prices.

The idea of ​​a global tax was first introduced by Brazil, which is chairing the G20 this year and is hosting a meeting of finance ministers in Rio de Janeiro at the end of July.

This report must be read as “a document intended to fuel the political debate and begin the discussion, not close it”, affirmed Mr. Zucman said during a press conference on Tuesday, emphasizing “the overwhelming demand of the people” for a fairer taxation.

Taxation of billionaires was also included in the French legislative election campaign, with the New Popular Front (left) proposing increased taxation of the “richest” at European level, without quantifying it for the moment.