An historic step towards taxing the super-rich
Are the G20 ready to get serious about tackling inequality?
On February 28-29, finance ministers from G20 member countries met in São Paolo. This was the first meeting of the G20’s money men and women under the Brazilian Presidency, which President Lula has announced will focus on tackling the scourge of extreme inequality.
And already it looks like this could be a G20 that really does act on inequality by increasing taxes on the super-rich. This week’s Bulletin is brimming with hope for a new era of progressive taxation to fight inequality.
The case for G20 action in numbers
Home to the rich. The G20 is home to nearly four out of five of the world's billionaires. In 2022, the top 1% of earners in the G20 made more than $18 trillion. That’s a figure higher than the GDP of China.
Tax cuts for the rich. Perhaps this should come as no surprise, given top rates of tax on the incomes of the top 1% have fallen by roughly a third over the last 40 years in these powerful economies. And where there are big winners, there are inevitably losers. In G20 countries like Brazil, France, the UK and US, the average worker pays a higher effective tax rate than the super-rich.
The best option available. It’s no longer news that trillions of dollars are needed to tackle inequality, poverty and climate breakdown in low- and middle-income countries. Or that budget cuts and other austerity measures are hitting people in both rich and poorer countries. The simple truth is that taxing the income and wealth of the super-rich is one of the best options available to governments to find the big money needed to stop these injustices.
The revenue potential. Let’s look at the potential of just one example of these inequality-busting taxes. A wealth tax of up to 5 percent on the G20’s multimillionaires and billionaires could raise nearly $1.5 trillion a year.
That would be enough to end global hunger, help low- and middle-income countries adapt to climate change, and bring the world back on track to meeting the United Nations’ Sustainable Development Goals (SDGs). Oh, and still leave more than half a trillion dollars to invest in inequality-busting public services and climate action in G20 countries.
Read our press release for how we calculated and sourced all these figures.
Scope for hope – and there’s lots of it this week!
Enter the G20 finance ministers in São Paulo. Brazilian Finance Minister Fernando Haddad set the scene with an unambiguous call to action: we need to ensure that the world’s billionaires contribute their fair share in taxes. He had plenty more to say, as summarized in this fantastic piece from our friends at Inequality.org.
Growing consensus. We know that during the meeting at least seven other countries were supportive of the G20 leading a plan to tax the super-rich. This includes France, whose Finance Minister Bruno Le Maire went on to publicly claim they will be “at the forefront” of efforts to tax the richest people.
Making headlines. The debate about taxing the super-rich dominated the meeting and the media commentary in Brazil and beyond. A recent poll has revealed that nearly three-quarters of millionaires in G20 countries support higher taxes on wealth, and over half think extreme wealth is a “threat to democracy.” Ordinary people in all G20 countries support measures to raise taxes on the richest as well. So, although some big players don’t support it yet, with political momentum and public outrage building it’s starting to feel like a matter of time before they jump (or are pushed!) on board.
Bring on the April Finance Ministerial in Washington DC for the next act in this historic drama.
Something to read and listen to
Read Gabriel Zucman’s (director of EU Tax Observatory and ICRICT member) speech where he presented his $250-billion-a-year idea to finance ministers in São Paulo: a minimum wealth tax on the super-rich. Follow him for more updates as he prepares a final report mandated by G20 Brazil Presidency on international action to tax the rich.
Watch this lively CNN discussion, on three reasons to up taxes on billionaires.
Watch celebrated Indian economist Jayati Ghosh explain why she supports the G20’s agenda to tax the super-rich.
Sign this petition calling on G20 leaders to tax the rich and join this open letter.
I don't want to get too excited, but I'm loving the green shoots on the inequality agenda after so long. Feels like we're finally getting back to #Occupy after a pause for 14 years.