Report Reveals Mega-Wealthy Pay Little to No Taxes; Suggests Minimum Tax Rate for Billionaires

Billionaires should face a minimum tax rate, according to a report which found some of the world’s mega-wealthy are paying little to no tax.

The EU Tax Observatory said most people pay a higher rate than the super-rich, who, it said, are able to use complex business structures for avoidance.

It suggested a minimum two per cent tax rate on billionaires’ global wealth would raise $250bn (£205bn) a year.

There are around 2 500 billionaires with a combined wealth of $13 trillion.

The report by EU Tax Observatory, part of the Paris School of Economics, examined how successful efforts to ensure individuals and companies pay their fair share have been over the past 10 years.

It said that the automatic sharing of the wealthy’s account information across more than 100 countries had significantly reduced offshore tax evasion.

However, billionaires are able to get away with paying tax rates equal to zero per cent or zero point five per cent of their wealth “due to the frequent use of shell companies to avoid income taxation”, it said.

Quentin Parrinello, a senior policy adviser at the EU Tax Observatory, told the BBC that global billionaires “structure their wealth so it does not generate a lot of taxable income”.

He acknowledged that countries implementing a two per cent tax on billionaires may sound “utopian”, but “so was the idea of asking Swiss banks to exchange tax information with tax authorities ten years ago and now this is a central provision of the fight against tax evasion”.

While the report commended an agreement in 2021 between 140 different countries to make sure companies pay at least 15 per cent in corporation tax, it said that the plan had been “dramatically weakened” since then by a “growing list of loopholes”.

Joseph Stiglitz, the Nobel Prize-winning American economist, suggested in an introduction to the report that unfairness in taxation poses a risk to democracy.

“If citizens don’t believe that everyone is paying their fair share of taxes – and especially if they see the rich and rich corporations not paying their fair share – then they will begin to reject taxation.

“Why should they hand over their hard-earned money when the wealthy don’t? This glaring tax disparity undermines the proper functioning of our democracy; it deepens inequality, weakens trust in our institutions, and erodes the social contract.”

Parrinello suggested that countries could use the next G20 summit, which takes place nearly a year from now in Brazil, to discuss a tax for the mega-wealthy.