Governments should create a global minimum tax on billionaires, which could raise $250 billion a year, according to a study by the EU Fiscal Observatory.
If implemented, the research team says, the amount would represent just 2% of the almost $13 trillion in fortunes held by some 2,700 tycoons around the world.
Currently, the effective personal contribution of billionaires is often much lower than what other taxpayers of more modest means pay because they can deposit their wealth in shell companies that protect them from income tax, the group warns in its Global Evasion Report Fiscal 2024.
“In our opinion, this is difficult to justify because it risks undermining the sustainability of tax systems and the social acceptability of taxes,” the observatory’s director, Gabriel Zucman, told reporters.
The EU Fiscal Observatory, which is based at the Paris School of Economics, said billionaires’ personal taxes are estimated to be close to 0.5% in the United States and as low as 0% in France.
The report points out that, although banking secrecy has come to an end and a minimum corporate tax has been established, ending decades of competition between countries in terms of tax rates, there are still many alternatives to minimize tax contributions.
For example, millionaires are increasingly putting their wealth into real estate rather than offshore accounts, while companies can exploit loopholes in the 15% minimum corporate tax.
Meanwhile, governments are increasingly competing for investment through subsidies, although that is less damaging to their tax bases than competing on low tax rates alone, the Observatory said.
(With information from Reuters).