World’s biggest economies agree at G20 to “collaborate” on taxing the super-rich

The world’s largest economies have agreed to “cooperate” at the G20 to tax the super-rich. The powers of the international economic forum are committed to continue moving towards a minimum and “coordinated” tribute to billionaires promoted by the Brazilian presidency.

As reported in this information, the “consensus” of the G20 does not reach a “clear endorsement”, imposed mainly by the resistance of the United States and Germany. Nevertheless, some of its main promoters consider it “a historic declaration” – according to the economist Gabriel Zucman, who is responsible for the proposal of a 2% tax on the wealth of billionaires that has been debated in the G20 – or “an advance important global” – according to Susana Ruiz, head of tax policy at Oxfam International, one of the organizations that is fighting the most against this measure.

“With full respect for fiscal sovereignty, we will strive to cooperate to ensure that ultra-high net worth individuals pay taxes effectively,” G20 finance ministers agreed in a declaration on international tax cooperation to be published this Friday night (6 p.m. in Brazil) and to which elDiario.es has access.

“Cooperation could include sharing good practices and promoting debate around tax principles and developing anti-avoidance mechanisms – including potentially harmful tax practices. We hope to continue to debate these issues at the G20 and other relevant forums, relying on technical contributions from relevant international organisations, academics and experts,” the document said.

“This is an important step in the right direction,” Zucman defended on the social network X (formerly Twitter), adding, “It’s not easy to get all the G20 finance ministers to agree on something.” “Until February this year, taxation of the super-rich had not been discussed even once at the G20.” Details of this “new agenda” that is unfolding “will be revealed by the next G20 presidency.”

According to sources familiar with the ongoing discussions in Brazil, “there is a consensus that the super-rich should be taxed.” However, “there are some differences about whether the mandate should go to the UN or the OECD. For example, the African Union places a lot of emphasis on institutionalism through the UN.

“There is also disagreement on whether this should be a global agenda or domestic action – as the United States preferred – but in the end there is an agreement to cooperate and go beyond the technicalities,” the same source adds. “There is still room for manoeuvre so that the proposal can be refined at the November summit and the way forward from here can be clarified. What Brazil has achieved is incredible, raising this issue and getting all countries to share this point of view,” he adds. “Spain is one of the countries that has been clearly in favour of this from the very beginning,” he concludes.

a historic step

“The average wealth per person of the richest 1% increased by almost $400,000 in real terms over the past decade (less than inflation), compared to just $335 (an increase of less than nine cents a day) for an individual in the top 1%,” Oxfam points out, compared to just $335 for an individual in the bottom half (of the wealth distribution, i.e. the poorest 50%).

“Inequality has reached obscene levels, and so far governments have failed to protect people and the planet from its devastating effects,” the organization continues. “The richest 1% of humanity keep filling their pockets while the rest have to look for crumbs.”

The “war on fair taxation” has led to lower tax rates on the wealth and income of the richest. Oxfam has estimated that less than 8 cents of every dollar raised in G20 countries comes from wealth taxes. The organization’s research also showed that the income share of the richest 1% in G20 countries has risen by 45% over four decades, while top tax rates on their income have fallen by about a third.

“Around the world, billionaires pay taxes equivalent to less than 0.5% of their wealth. Their wealth has grown by an average of 7.1% annually over the past four decades, and reducing billionaires’ enormous wealth would require an annual net wealth tax of at least 8%,” he explained in Oxfam.

The G20 is made up of the main economies of each continent, excluding countries not fully aligned with the G7 powers (the USA, the entire European Union, the United Kingdom or Japan), such as Saudi Arabia, Russia, China, India, Argentina, South Africa, Brazil or the African Union, and in which Spain is a “permanent guest”. Oxfam says “G20 countries are home to nearly four of every five billionaires in the world.”

Economy Minister Carlos Bondy announced his support for a “tax on the super-rich” and “a new agenda to fight inequality worldwide” in an open letter signed with First Vice in late April, along with the President and Finance Minister, María Jesús Montero, South Africa’s Finance Minister, Enock Godongwana, Brazil’s Finance Minister, Fernando Haddad, and, surprisingly, Germany’s Minister for Economic Cooperation and Development, Svenja Schulze.

However, Germany’s representative in this G20 discussion has been Finance Minister Christian Lindner, who is from the Liberal Party, which governs in coalition with Scholz’s SPD and the Greens, and has a different position from his compatriots. Basically, “no to raising taxes.”

So far, the move towards fairer taxation has gained momentum from voices beyond the left. In June, G7 finance ministers reached “another historic agreement” on a 15% minimum tax on multinational profits and dedicated themselves to “fighting tax evasion”. These positions mirror the inertia generated in other leading organizations (OECD, IMF…), and which has reached prestigious speakers such as the Financial Times. “We are one step closer to taxing the super-rich,” was the title of a column published by the newspaper specializing in economic information in May.

Of course, the proposal designed by Zucman has also faced resistance. The most relevant was the case of Janet Yellen, the Treasury Secretary of the United States, who showed in May, after the G7, her discomfort with the idea of ​​​​”a minimum tax of 2% that would affect about 3,000 of the richest people in the world -more than $ 1 billion, measured in wealth, not income-.” In total, according to the calculations of the French economist, $ 250 billion would be raised “for the fight against climate change and poverty.”