The world’s most influential finance leaders vowed to work collectively towards successfully taxing the ultrarich however stopped wanting agreeing on how to take action at a gathering in Rio de Janeiro final week.
In a joint declaration on Friday, finance ministers and central bankers from the Group of 20 main economies mentioned that “ultra-high-net-worth people” ought to “contribute their justifiable share in taxes.”
“Nobody ought to be capable of evade taxation, together with by circumventing transparency requirements,” the declaration mentioned.
Because the 2024 host of the G20 discussion board, Brazil has made taxing the ultrarich its trigger célèbre, commissioning economist Gabriel Zucman to create a blueprint for a worldwide scheme to tax billionaires’ wealth — an concept as soon as dismissed as “utopian,” he mentioned.
In his report, Zucman estimated {that a} coordinated push by governments to tax the world’s roughly 3,000 billionaires 2% of their wealth would generate between $200 and $250 billion a 12 months.
He added that extending the proposed minimal tax charge to “centimillionaires,” whose estimated wealth exceeds $100 million, would elevate a further $100 to $140 billion.
A number of international locations in Europe, Latin America and Africa backed Brazil’s name for a worldwide minimal wealth tax, much like the worldwide minimal tax charge for multinational firms agreed to by greater than 130 international locations in 2021. The USA and Germany had been key holdouts.
“[Tax] coverage could be very troublesome to coordinate globally,” U.S. Treasury Secretary Janet Yellen instructed reporters on the sidelines of the G20 assembly. “And we don’t see a necessity or actually assume it’s fascinating to attempt to negotiate a worldwide settlement on that. We predict that each one international locations ought to be sure that their taxation techniques are truthful and progressive.”
Germany’s finance ministry labeled the concept “irrelevant,” in line with France 24.
Whereas no settlement was reached in the course of the finance leaders’ assembly on July 25 and 26, their joint declaration famous that improved cooperation between G20 members may “contain exchanging greatest practices, encouraging debates round tax ideas, and devising anti-avoidance mechanisms, together with addressing probably dangerous tax practices.”
Brazilian Finance Minister Fernando Haddad mentioned he noticed the declaration “not as the top of a journey, however as a place to begin.”
Longtime advocates for the worldwide minimal wealth tax, together with Nobel laureate Joseph Stiglitz, additionally urged the G20 to go additional. Stiglitz, who co-chairs the Impartial Fee for the Reform of Worldwide Company, a bunch of high economists, recommended the United Nations was the suitable discussion board to proceed the dialogue.
The thought of taxing the super-rich and attempting to have extra progressive system of worldwide taxation is one thing that’s on the desk now.
— economist Ricardo Martner
For many years, the Organisation for Financial Co-operation and Growth, representing largely high-income international locations, has set the worldwide tax agenda. However negotiations over a U.N. framework conference on tax, which may shift energy away from the OECD, are at present underway in New York.
“The thought of taxing the super-rich and attempting to have extra progressive system of worldwide taxation is one thing that’s on the desk now,” Ricardo Martner, an economist and ICRICT commissioner, instructed ICIJ.
Martner, who is predicated in Chile, mentioned that African international locations and a few Latin American international locations don’t understand the OECD course of as “inclusive and equitable,” spurring the push to offer the U.N. extra sway, regardless of ongoing OECD-led initiatives to curb company profit-shifting.
Wealth and company taxes have proved to be a sticking level throughout early negotiations over the U.N. tax conference, and Yellen mentioned on Friday that she believes the OECD, which oversaw the 2021 international company minimal tax deal, stays the perfect discussion board for complicated tax negotiations.
“We don’t need to see this shifted to the U.N.,” Yellen mentioned. “We’ve made an enormous quantity of progress, and the U.N. doesn’t have the technical experience to do that.”
