Three things are certain in life: Death, taxes, and billionaires not paying said taxes.
Now, calls are on the rise to get them to pay their fair share.
Driving the news: The EU Tax Observatory wants the world to come together and impose a minimum 2% wealth tax on billionaires, which it believes could raise US$250 billion annually.
- There are currently ~2,700 billionaires globally, possessing a combined net worth of ~$13 trillion, a sum that our tiny writer brains can’t even comprehend.
Why it matters: Billionaires pay far fewer taxes than most folks — between zero and 0.6% of their total wealth on average, per the Observatory — thanks to a mastery of tax loopholes.
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The preferred tactic is moving money through shell companies that exist solely to house personal wealth.
- The Observatory says this tactic undermines tax systems and exists on the “border of legality” (which sounds like it could be the title of the next Liam Neeson movie).
Zoom out: The fight against tax dodging has picked up steam as governments need more money for stuff like the green transition, disaster preparedness, and innovation investments.
- New rules could make the Caribbean tax haven (the oldest trick in the book) a thing of the past, while Joe Biden proposed a 25% tax on the US’s richest 0.01% this year.
Bottom line: Any billionaire tax would face pushback from the Three Comma Club and would take impressive global coordination at a time of heightened geopolitical tension. But there is a recent precedent for its potential success: In 2021, 136 countries agreed to set a 15% floor on corporate taxation for multinationals, which will take effect next year.—QH