Ministers propose a minimum tax of 2% on the income of the super-rich
The note bears the signature of Svenja Schulze (Minister of Economic Cooperation and Development of Germany), Fernando Haddad (Minister of Finance of Brazil), Enoch Godongwana (Minister of Finance of South Africa), María Jesús Montero (first vice president and Minister of Finance of Spain) and Carlos Body (Minister of Economy, Commerce and Business of Spain).
There they warn that in the future “Current global economic trends pose serious threats to progress towards greater equality” Given the Inequality of opportunity has been shown to be “transmitted from generation to generation.”
The persistence of Global inequality “harms economic development because it inhibits innovation and prevents people from developing their full potential.”the ministers stated, and added that it ends up being “corrosive” for democracy because it affects social cohesion.
The concatenation of negative effects generated by inequality in society means that there is less and less support for certain structural reforms, such as combating climate change, they indicated.
The ministers stated that, despite the current reality, “there is increasingly more global awareness” about equitable and sustainable growth. “Increase prosperity while fight against inequality within each country and between countries and generations, including deep-rooted racial and gender inequalities, should not be incompatible,” they stressed.
“In this situation, Brazil has made the fight against poverty and inequality a priority of its G20 presidencya priority that is also pursued by German development policy and that Spain has ambitiously addressed both national and global levels. By allocating two-thirds of total spending to social services and wage support, in addition to calibrating the administration of tax policy, South Africa continues to aim at a progressive fiscal and tax program that addresses the country’s legacy of income and wealth inequality,” they highlighted.
That is why They asked the international community to once and for all “take seriously the fight against inequality and the financing of global public goods” through the implementation of progressive tax policy. “A fair contribution increases social well-being,” they said.
“Taking these objectives into account, Brazil brought for the first time to the negotiating table of the world’s main economies a proposal for global minimum tax on billionaires“, they pointed out, which proposes a 2% minimum tax of the wealth of some 3,000 billionaires.
They propose a tax on billionaires to combat global inequality
When explaining its implementation, they indicated that it would not apply “to billionaires who already contribute a fair share of income taxes. However, those who manage to avoid paying income tax would be forced to contribute more to the common good.”
Its application would allow, they said, to improve “the capacity of our tax systems to comply with the principle of equity, so that contributions are adjusted to the ability to pay.” Currently, billionaires around the world only pay the equivalent of up to 0.5% of their wealth in income tax.
“A coordinated global minimum tax on billionaires would be a significant step in this direction,” the ministers said., given that it would promote social justice “and increase confidence in the effectiveness of fiscal redistribution.” All of this would result in better educational, health, infrastructure and environmental services.
As they noted, such a tax would “potentially unlock additional tax revenues of $250 billion per year worldwide,” that is, the equivalent of what is lost due to damage caused by weather events annually.
Because billionaires could find mechanisms to avoid paying the tax by moving their wealth to low-tax jurisdictions, ministers called for the tax on the super-rich to be included. “on the G20 agenda” and let it be a topic of “international cooperation” so that it achieves effectiveness.
Finally, they stressed that fighting against inequality “requires a Political compromise, a commitment to the objectives of inclusive, fair and effective international tax cooperation”.
