New Study: Global Billionaire Tax Could Generate $250 Billion Annually

Governments should open a new front in the international clampdown on tax evasion with a global minimum tax on billionaires, which could yield $250 billion annually, the EU Tax Observatory said on Monday. If levied, the sum would be equivalent to only 2% of the nearly $13 trillion in wealth owned by the 2,700 billionaires globally, the research group hosted at the Paris School of Economics said. Its global tax evasion report 2024 pointed out that many billionaires pay lower effective taxes than ordinary citizens of more modest means, mainly because they can use holding companies to shelter their income.

The tax would be based on the net worth of households with more than $100 million in assets. It would include standard taxable income and unrealized capital gains, the observatory said in a fact sheet. It also suggested a rate of 3% to 4% of the value of assets, or “net worth,” which could generate more revenue than a rate on income alone. The observatory also recommended measures, including creating a global asset registry and more robust application of economic substance and anti-abuse rules.

It added that while governments have made significant progress in ending banking secrecy and reducing the ability of multinationals to shift profits to low-tax countries, they still haven’t done enough to address the issue of private wealth. “The growing concentration of wealth has led to a sharp increase in inequality, and it is time to stop this trend,” the observatory said.

Although a global tax on billionaires would require the support of many countries, the observatory believes that it is doable because of advances in technology and the increased willingness of governments to fight evasion. Creating a global minimum tax on corporations took years of negotiation, but the observatory said it would be easier to agree on a system that applies to individuals.

The observatory says that the global tax on billionaires would be an excellent complement to other policies, such as raising the corporate tax rates and strengthening enforcement. It also would help counter pressure from wealthy individuals and their advocates for more tax cuts.

Oxfam economist Didier Jacobs says a global billionaire tax would ultimately end dollar-a-day extreme poverty in all nations, fund universal access to primary education and health care, and spur economic growth. However, he acknowledges significant hurdles, such as the need for more international authority to levy the tax and the lack of political will among some governments. He sees the United Nations playing a crucial role in implementing the tax over three steps. The first step would be to set the rate at a minimum of 2% and make it enforceable by treaty. That would be followed by a second step to include other forms of wealth, such as unrealized capital gains and family trusts. A third step is to expand the scope to all assets, including real estate.