The world is obsessed with money. Those who have some want more, and those who don’t have any not unreasonably want a share, too.
Financial experts argue that economies were created to let people earn the wealth they needed to live comfortable lives.
Somewhere along the way, everything went wrong as some individuals found ways to beat the system and earn wealth faster than the rest.
Economists say this has left an unbalanced world with less productive economies, worsening longevity with more people slipping into debt to pay day-to-day bills.
However, the Tax Justice Network, a not-for-profit group campaigning for tax equality, says there is a solution. TJN wants more governments to follow the Spanish example of a wealth tax for the super-rich, which comprises the world’s 3,000 billionaires and around 425,000 multi-millionaires with net worths of $30 million or more.
How To Raise $2 trillion From The Wealthy
TJN doesn’t propose soaking the super-rich to pay for people with low incomes. A 0.5 per cent wealth tax would raise $2 trillion annually.
In a report, How To Tax The Super-Rich, TJN lays out the steps needed to introduce a global wealth tax.
Tax triggers
Set a tax trigger for each country that covers only the top 0.5 percent of wealth. The trigger will differ for each country.
For example, in Switzerland, a taxpayer must have a net worth of more than $11 million to trigger the wealth tax. The $11 million remains untaxed, while the wealth tax will apply to any amount over $11 million.
How does your wealth compare with the super-rich?
Tackle Tax Cheats
Stop people from shifting assets into different wealth categories, like fine wine or jewellery. Only taxing some types of wealth invites avoidance and moving money to categories with the least tax rather than those with the most productive investments.
Set Up Transparent Paper Trails
Official records must show how much someone is worth and the tax they should pay. Unfortunately, the super-rich can cover up company records and information about who controls and benefits from corporate assets. Governments must tackle this problem with tamper-proof official documents and independently verified registers.
Close Tax Havens
The only reason to do business through a tax haven is to hide who controls or benefits from a company or to keep financial information secret to pay less tax. The United Nations is currently discussing a global tax treaty which should include a ban on tax havens.
Stop A Super-rich Exodus To Avoid Tax
A few individuals will move countries to avoid a super-rich tax. Rules must be implemented to ensure they pay what is due in both countries without unfair double taxation.
However, if all countries levy a wealth tax, there would be little point in moving elsewhere to avoid the liability.
Deal With Illiquid Businesses
Only some super-rich can quickly raise funds or keep large stashes of cash. Some have businesses that are hard to sell or do not generate massive amounts of money. A framework must consider this by valuing businesses and assets to part-seize as an alternative to cash.
Spain Already Taxes Super-rich
Spain introduced a ‘temporary’ wealth tax in 2022, which applies to the richest 0.5 per cent of households.
The tax is paid by anyone with a net worth of €3 million or more. TJN proposes that other governments copy the rules. The campaigners reckon a wealth tax would raise £31 billion annually in the UK.
The study aims to pressure G20 governments, which are considering plans for a global wealth tax for billionaires. Brazil, France, Germany, Spain, and South Africa have already indicated they will support the measure.
TJN researcher Alison Schultz, who co-authored the study, said: “A minority of rich countries still seem to be holding back from support for a robust framework convention on tax – despite this being the best opportunity that we’ve ever had, and one that their people demand they act on with urgency.
“This needs to change now – the climate can’t wait, and nor can the people of the world.”
What is the Tax Justice Network?
The Tax Justice Network is an advocacy group based in the United Kingdom, composed of researchers and activists who share a common concern about several critical issues related to the unfairness of international taxation.
How rich are the world’s billionaires?
The world’s billionaires are between 2,780 and 3,000 of the super-rich with a combined net worth of $14.2 trillion.
Who is the world’s richest person?
Tesla car maker owner Elon Musk is accepted as the world’s richest person, with a fortune of $240 billion.
Do billionaires want to pay more tax?
Many of the world’s richest people would like to pay more tax but can’t because governments will not accept donations that exceed any tax due.
What is the global minimum tax?
The global minimum tax (GMT) is an internationally agreed-upon minimum flat-rate tax that would be paid by large corporations. The new GMT sets a proposed rate of 15 per cent on profits. The Organisation for Economic Co-operation and Development (OECD) proposal has received the support of 137 countries.
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