Taxing the super rich

G20 finance ministers have stressed their desire to cooperate on building an effective tax regime for the world's super-rich, ahead of the G20 summit in mid-November.

AFP news agency yesterday quoted a joint statement from G20 finance ministers, a group of the world's leading rich and developing countries, agreeing to work together to effectively tax the super-rich.

Brazil's efforts

The G20’s push to tax the super-rich began earlier this year, when Brazil, as the rotating chair of the group, called for a minimum 2% tax on billionaires in February. However, finance ministers failed to reach a consensus on the tax at their July meeting in Rio de Janeiro.

A marina in Honolulu (Hawaii, USA)

This is because Brazil's proposal has divided G20 members. France, Spain and South Africa have voiced their support, while the US has rejected it. "It is very difficult to coordinate tax policy globally, and we do not see the need or really think it is necessary to negotiate a global agreement on this issue," Reuters quoted US Treasury Secretary Janet Yellen as telling reporters.

In that context, governments are concerned that the super-rich will move their assets to tax havens if the tax is implemented individually in a few countries. "Collective taxation is a win-win for everyone. Many countries will lose if it is not implemented uniformly," AFP quoted economist Rogério Studart of the Brazilian Center for Foreign Relations (based in Rio de Janeiro).

After discussions with the International Monetary Fund (IMF), the World Bank (WB) and central bank governors in Washington DC (USA) yesterday (Vietnam time), G20 finance ministers issued a groundbreaking joint statement.

"In the spirit of fully respecting national sovereignty in tax administration, we look forward to discussing potential areas of cooperation to ensure that taxation is delivered to ultra-high-net-worth individuals," the joint statement said.

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The world's richest 1%

Oxfam (Kenya), an international coalition working to tackle global poverty, responded positively when the G20 reiterated its commitment to work towards a tax system that includes the super-rich.

On the day of the Washington DC debate, Oxfam released a report showing that it took the world’s richest 1% just 10 years to amass a new fortune of around $42 trillion. That’s nearly 36 times more than the combined wealth of the poorest 50% of the world’s population. Yet billionaires currently pay taxes equivalent to 0.3% of their vast fortunes, according to calculations by Gabriel Zucman, founding director of the France-based European Union Tax Observatory and author of the Oxfam report.

He said a minimum tax of 2% would raise $200-$250 billion a year if taxing about 3,000 super-rich individuals globally. The money could be spent on public services such as education, health care, as well as helping the world fight climate change, according to the report.

"For the first time in history, the G20 has now reached consensus on the need to change the way the super-rich are taxed, and is committed to working together to achieve this goal," AFP quoted Mr. Zucman as commenting on the joint statement of the G20 finance ministers.

G20 finance ministers have reached an agreement on cooperation in taxing the super-rich ahead of the G20 Summit scheduled to take place in Rio de Janeiro, Brazil, on November 18-19. Tax issues will be one of the priorities of the conference in the South American country. For the plan to be officially implemented, heads of state and leaders attending the G20 Summit need to ratify the commitment reached in the joint statement of the ministers in Washington DC yesterday.

How much money is considered super rich?

The world is witnessing an explosion of the super-rich, thus leading to the need to redefine this class.

According to Fortune and the Financial Times, an individual must have a minimum net worth of $30 million (about VND780 billion) to join the world's super-rich club. Multinational consulting and information technology firm Capgemini (headquartered in France) calculated that the number of people with assets of more than $30 million increased from 157,000 in 2016 to 220,000 in 2023. This number marks an increase of nearly 28% in just 7 years.

Real estate consultancy Knight Frank (headquartered in the UK) predicts that membership of the super-rich club will continue to increase by about 28% over the next 4 years.

Source: https://thanhnien.vn/danh-thue-gioi-sieu-giau-185241025204710166.htm