A survey indicated that some of the world's mega-rich individuals pay less taxes than others, suggesting they should be subject to a minimal tax rate.
Reportedly, the wealthy pay a lower effective tax rate than the general population because they can elaborate legal loopholes and adopt more sophisticated tax planning strategies.
The European Union's Tax Observatory estimated that a 2% tax on the wealth of the world's billionaires would generate $250 billion annually. About 2,500 people have reached the status of "billionaire," amassing a total wealth of $13 trillion.
'Growing List of Loopholes'
EU Tax Observatory, based at the Paris School of Economics, looked at how effective efforts have been over the last decade to guarantee that businesses and people pay their fair share of taxation.
It was reported that offshore tax evasion has been drastically cut down due to the automatic sharing of affluent people's account information across more than 100 nations.
According to the report, billionaires may get away with paying tax rates of 0% or 0.5% of their wealth by using shell corporations to reduce their taxable income. EU Tax Observatory senior policy consultant Quentin Parrinello told the BBC that global billionaires "structure their wealth so it does not generate a lot of taxable income."
A strategy to ensure that firms pay at least 15% in corporate tax was praised in the report, but it noted that the system has been dramatically weakened by a growing list of loopholes since 2021.
Parrinello has proposed that the next G20 conference, scheduled to take place in Brazil next year, be used to debate a tax for the super-rich. While international accords are ideal, he acknowledged the need to be realistic, noting that individual nations may follow some of the ideas presented in the EU Tax Observatory study.
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The Idea of Fair Taxation
The report's preface was written by Nobel Prize-winning American economist Joseph Stiglitz, who argued that tax inequality threatens 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," he wrote. "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."
As nations throughout the globe confront the problems of climate change, pandemics, and inequality, and as governments must make crucial investments in education, health, infrastructure, and technology, Stiglitz said that addressing fair taxation and collecting revenues was critical for society.
