Taxing the super-rich

G20 finance ministers have stressed their desire to cooperate in building an effective tax mechanism for the global super-rich ahead of the G20 summit in mid-November.

AFP reported yesterday that G20 finance ministers, representing the world's leading group of wealthy and developing nations, agreed to work together toward effectively taxing the super-rich.

Brazil's efforts

Efforts to tax the super-rich were launched by the G20 earlier this year, when Brazil, in its role as the rotating G20 president in February, called for a minimum 2% tax rate on billionaires. However, at the July meeting in Rio de Janeiro, Brazil, finance ministers were unable to reach an agreement on the tax rate.

A marina in Honolulu (Hawaii, USA)

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

Against this backdrop, governments fear the possibility that the super-rich will move their assets to tax havens if the tax is implemented individually in a few countries. "A collective tax would be a win-win for everyone. Many countries would lose if the implementation wasn't consistent," AFP quoted economist Rogério Studart of the Brazilian Center for Foreign Relations (based in Rio de Janeiro).

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

"With full respect for national sovereignty in tax administration, we look forward to discussing potential areas of cooperation to ensure that the taxation of ultra-high-net-worth individuals is carried out," the joint statement said.

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The wealthiest 1% of the world's population.

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

On the day of the discussion in Washington DC, Oxfam released a report showing that the richest 1% of the world's population would only take about 10 years to accumulate new wealth worth approximately $42 trillion. This figure is nearly 36 times higher than the total wealth of the poorest 50% of the world's population. Yet, these billionaires currently pay taxes equivalent to only 0.3% of their enormous wealth, according to calculations by Gabriel Zucman, founding director of the European Union Tax Observatory (based in France) and author of the Oxfam report.

He stated that a minimum tax rate of 2% would generate between $200 and $250 billion annually if approximately 3,000 ultra-wealthy individuals globally were taxed. The revenue could be used for public services such as education and healthcare, as well as to support the global fight against climate change, according to the report.

"For the first time in history, the G20 has now reached a 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 Zucman as saying about the joint statement of the G20 finance ministers.

G20 finance ministers have reached an agreement on cooperating to tax 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 summit in the South American country. For the plan to be officially implemented, the heads of state and national leaders attending the G20 summit need to ratify the commitment reached in the ministers' joint statement in Washington, D.C., yesterday.

How much money does it take to be considered super rich?

The world is witnessing an explosion of the ultra-rich, which necessitates a redefining of this class.

According to Fortune and the Financial Times, an individual must have a minimum net worth of $30 million (approximately 780 billion VND) to join the world's ultra-rich club. The multinational consulting and information technology firm Capgemini (based in France) calculated that the number of people with assets exceeding $30 million increased from 157,000 in 2016 to 220,000 in 2023. This represents an increase of nearly 28% in just seven years.

The UK-based real estate consultancy Knight Frank predicts that the number of people in the ultra-rich club will continue to increase by approximately 28% over the next four years.

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