- Author: Dearbail Jordan
- BBC News business reporter
Billionaires should pay the minimum tax rate, according to a report that found some of the world’s mega-rich pay little or no tax.
The EU Tax Observatory found that most people pay a higher rate than the super-rich, who it said are able to use complex business structures to avoid paying taxes.
It suggests that a minimum tax rate on billionaires’ worldwide wealth of at least 2% would raise $250 billion ($205 billion) a year.
There are approximately 2,500 billionaires in the world, whose total wealth is USD 13 trillion.
A report by the EU Fiscal Observatory, part of the Warsaw School of Economics, examined how effective efforts have been to ensure that individuals and companies are paid fairly over the past 10 years.
Automatic sharing of wealthy account information in more than 100 countries was found to significantly reduce overseas tax evasion.
However, billionaires manage to avoid paying tax rates of 0% or 0.5% of their wealth “due to the frequent use of shell companies to avoid income taxation,” it said.
Meanwhile, the report praised the 2021 agreement between 140 different countries that will ensure that companies pay at least 15% in corporate income tax, but noted that the plan has since been “dramatically weakened” by a “growing list of loopholes.”
Joseph Stiglitz, an American economist and Nobel Prize winner, suggested in the introduction to the report that unfair taxation is a risk to democracy.
“If citizens do not believe that everyone pays their fair share of taxes – and especially if they see that wealthy and wealthy corporations do not pay their fair share of taxes – they will begin to reject taxation.
“Why should they give away their hard-earned money when the rich don’t? This gross tax disparity undermines the proper functioning of our democracy; deepens inequality, erodes trust in our institutions and undermines the social contract.”
Some of the richest people in the world have pledged to give up most of their wealth. Microsoft co-founder Bill Gates, philanthropist Melinda French Gates and billionaire investor Warren Buffett created the Giving Pledge in 2010 to “set a new standard for generosity among the ultra-wealthy.”
After a series of tax changes in 2013, Buffett admitted that although his tax rate had increased, he still paid a lower percentage than his secretary.
“I will probably be the lowest-paying taxpayer in the office,” he said then.
Stiglitz said that addressing tax fairness and revenue collection is “critical” for society “as countries around the world face the challenges of climate change, pandemics and inequality, and governments must make the necessary investments in education, health, infrastructure and technologies “.
One relatively recent signatory of the Giving Pledge is MacKenzie Scott, author and former wife of Amazon founder Jeff Bezos.
As part of her divorce four years ago, she received 4% of the shares in the online retail giant. Since then, Scott has given away approximately $14 billion, and according to Forbes, she is now worth approximately $33.6 billion.
Her ex-husband of 25 years, Bezos, is the third richest man in the world, worth $148 billion. He told CNN last year that he wanted to give away most of his fortune.
Elon Musk, owner of X, formerly of Twitter, and co-founder and leader of Tesla and SpaceX, is currently the richest person in the world according to Forbes with a fortune worth $225 billion.
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