While the rich exert their influence and amassing a disproportionate share of global wealth, An economist said Tuesday that the minimum tax proposal for billionaires could soon become a reality.
Paying a fair share: The concentration of wealth has become a “global” and “alarming” problem, said Gabriel Zucman, Professor of economics at the Paris School of Economics and the University of California, contributed an op-ed to Project Syndicate.
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Citing statistics, the economist said just 3,000 people now boast $14.4 trillion in wealth, equivalent to 13% of global GDP. This compared with a much smaller 3% share of GDP of their wealth in 1993, he added.
Zucman also highlighted “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 the issue at a meeting held last month in Rio de Janeiro, as the final statement called on “all taxpayers, including ultra-high net worth individuals, to pay their fair share of the contribute taxes”. ”, said the economist. “Aggressive tax avoidance or tax evasion by ultra-high-net-worth individuals can undermine the fairness of tax systems,” the grouping of the world’s largest developed and emerging countries said in the statement, he added.
Zucman put forward his argument that why the richest should pay their fair share of taxes, governments without sufficient tax revenues would be handicapped to ensure adequate services such as education, health care and social protection, and that they would also be unable to respond to much larger problems. such as the climate crisis.
The economist noted the results of an Ipsos poll of G20 countries, which found that an overwhelming 67% of people agree that there is too much economic inequality, and that 70% support the principle that rich people should have higher income tax rates have to pay.
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Minimum tax on the agenda: Although the Rio Declaration marked an important shift in recognizing that the ultra-rich must pay their fair share of taxes, there was no political consensus on the 2% minimum tax for billionaires and it was not part of 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.
However, the economist thinks there is ‘no way 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 rein in rampant tax avoidance by multinational companies, and that as of October 2021, 136 countries and territories had adopted minimum corporate taxes of 15% and 15%.
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Not all countries need to introduce a minimum 2% billionaire tax. “We simply need a critical mass of countries to agree on a set of rules to identify and value the wealth of the ultra-rich, and to adopt tools to impose effective taxation anyway. of the tax residence of the billionaires,” said Zucman.
“In this way, we can avoid a scenario where the ultra-rich flee to tax havens, ending the race to the bottom among countries competing to offer billionaires the lowest tax rate.”
Why it’s important: The billionaires’ tax proposal was suggested by the president in the US Joe Biden’s consistent with the Democratic Party’s agenda to identify additional funding sources to finance government spending. But it was opposed by some of the wealthiest.
In a March 2023 post on X, formerly Twitter, Biden said the following Billionaires pay an average of 3% in taxes. “Look, I think you should be able to become a billionaire if you can earn it, but just pay your fair share. I think you should pay at least 25% tax,” he said.
See also: How do billionaires pay less income tax than you? Tax deferral is their main strategy.
Zucman said in a New York Times op-ed earlier this year that billionaires like it Jeff Bezos of Amazon And Tesla’s Elon Musk pay the least taxes in relation to the amount of money they earn, because they live off their wealth, unlike the common man who lives on salaries.
If Amazon were to give its profits to shareholders as dividends, which are subject to income tax, Bezos would have to pay a hefty tax bill, he said.
‘Unless Mr. Bezos, Warren Buffett or Elon Musk sells their shares, their taxable income is relatively minuscule. But they can still make high-profile purchases by borrowing against their assets,” he said.
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This article Elon Musk, Jeff Bezos and other ultra-rich cross-hairs? Economist says ‘no going back’ on tax proposal from at least 2% billionaires originally appeared on Benzinga.com