As the wealthy exert their influence and capture a disproportionate share of the world’s wealth, An economist said Tuesday that a proposed minimum tax for billionaires could soon become a reality.
Pay your fair share: The concentration of wealth has become a “global” and “alarming” problem, said Gabriel Zucman, Professor of economics at the Paris School of Economics and the University of California, in an opinion piece contributed to Project Syndicate.
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According to the economist, today only 3,000 people have a wealth of $14.4 trillion, or 13% of the world’s GDP. In 1993, this share of GDP was well below 3%, he added.
Zucman also pointed out “two striking similarities” among the ultra-wealthy. “The vast majority are men; and they typically pay much less in taxes, as a proportion of their income, than their employees and middle-class workers in general,” he said.
The severity of the problem prompted the G20 to address it at a meeting in Rio de Janeiro last month, with the final declaration calling on “all taxpayers, including the very wealthy, to contribute their fair share of taxes,” the economist said. “Aggressive tax avoidance or tax evasion by the very wealthy can undermine the fairness of tax systems,” he added.
In making his argument that the wealthy should pay their fair share of taxes, Zucman said that without sufficient tax revenues, governments would be unable to provide adequate services such as education, health care and social protection, nor would they be able to address much broader problems such as the climate crisis.
The economist noted the results of an Ipsos poll in the G20 countries, which showed that an overwhelming majority of 67% of respondents believe that there is too much economic inequality and 70% support the principle that wealthy people should pay higher income tax rates.
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Minimum tax on the agenda: While the Rio declaration marked a significant shift in recognizing that the ultra-rich should pay their fair share of taxes, there was no political consensus on the 2% minimum tax on billionaires and it was not included in the final text, Zucman said. “The declaration had to be approved unanimously and some countries still have reservations about some aspects of the proposal,” he said.
The economist believes, however, that “there is no going back.” “The minimum tax is now on the agenda, and…
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