A European think tank has unveiled a revolutionary approach to boost revenue for nations by introducing a tax on the super-wealthy.
The EU Tax Observatory suggests that governments worldwide should collaborate to combat tax evasion and implement a global minimum tax on billionaires, potentially generating a staggering $250 billion each year.
This proposed tax, set at 2% of the approximately $13 trillion owned by around 2,700 global billionaires, has the potential to significantly increase tax revenues compared to current amounts collected from the wealthiest individuals. This idea comes from the EU Tax Observatory’s 2024 Global Tax Evasion Report.
The research group revealed that billionaire tax rates are often lower than those imposed on the general population. This happens because billionaires have access to resources that enable them to shield their wealth from income taxes by placing it in shell companies.
The EU Tax Observatory, hosted at the Paris School of Economics, shared that the estimated personal tax rates for billionaires are as low as 0% in France and close to 0.5% in the United States.
Efforts to raise taxes on billionaires have been gaining momentum, with U.S. President Joe Biden proposing a minimum 25% tax on the top 0.01% of the wealthiest individuals in his 2024 budget plan. However, Congress’s approval of the plan remains uncertain.
While it’s a challenging endeavor, past initiatives have successfully coordinated strategies for increased taxation. In 2021, an agreement involving 140 countries established a global minimum corporate tax rate of 15%. This aimed to curtail the ability of multinational corporations to reduce their tax liabilities by routing profits to low-tax jurisdictions.
EU Tax Observatory Director Gabriel Zucman commented, “Something that many people thought would be impossible, now we know can actually be done. The logical next step is to apply that logic to billionaires, and not only to multinational companies.”
While the introduction of a minimum corporate tax marked an end to countries’ competition for lower tax rates, the report emphasizes that certain loopholes still exist, allowing companies to minimize their tax obligations.
[Source: Information derived from VOA]