Gabriel Zucman, a renowned economist and professor at the University of Berkeley, recently presented a report to the G20 detailing the benefits of a global tax on the ultra-rich. According to him, this tax could bring in between 200 and 250 billion dollars per year, a colossal sum intended to finance projects for the common good. The proposal specifically targets the 3,000 people whose assets exceed $1 billion, imposing an annual tax of 2% on them.
Growing global wealth inequality
In recent decades, the richest have increased their wealth considerably. In 1987, the richest households accounted for 3% of the world’s Gross Domestic Product (GDP). Today, this figure rose to 14%. This phenomenon is partly attributable to a tax system that favors the very wealthy, who pay only a tiny fraction of their wealth in tax. Zucman points out that billionaires pay an average tax rate of just 0.3%, which reinforces global economic inequality.
To remedy this situation, Gabriel Zucman proposes taxation based on the rate of return on the wealth of the ultra-richwhich has averaged 7.5% per year over the past four decades. A 2% tax would reduce that return to 5.5%, an impact that Zucman calls “small” but significant in reducing inequality. Moreover, if the tax were extended to individuals with fortunes between $100 million and $1 billion, it could generate up to $140 billion more per year.
Tax on the ultra-rich: for fairer taxation
The implementation of this tax would not require a multilateral agreement, each country can decide to adopt it independently. This approach could simplify the process and encourage social cohesion and trust in governments, although some states may be reluctant.
Politically, Zucman’s proposal has received mixed support. In the United States, the idea of taxing the ultra-rich is not unanimous, even if a 25% floor tax on billionaires is already being discussed to reduce the federal deficit. On the other hand, countries such as Spain, Belgium, Colombia, South Africa as well as Bruno Le Maire have expressed their support.
Despite the challenges, Gabriel Zucman remains optimistic. He recalls the success of the introduction of a minimum tax of 15% on the profits of multinationals, a process which took nine years. “ I hope the taxation of billionaires goes faster “, he says, convinced that the debate on tax justice is already well underway.
