We’ve known for a while now that our desire for lawmakers around the world to raise taxes on wealthy people like us isn’t fringe. But now, we officially have the numbers to back it up – and a blueprint for how international leaders can institute minimum standards for taxing the global rich.
The last time we discussed our international work was back in April. A lot has happened since then, specifically with regard to the ongoing discussion among G20 countries to implement a global minimum tax on billionaires. For this week’s Closer Look, we’d like to give you a rundown of the key developments that have occurred in the international tax space over the last two months and how the Patriotic Millionaires have plugged into the conversation.
As a recap, Brazil assumed the presidency of the G20 last December. Even before it officially assumed the role, the Brazilian government voiced their commitment to prioritize issues of international tax justice as part of their G20 agenda. It didn’t take long for them to deliver on this promise: in February, they invited world-renowned economist Gabriel Zucman to deliver a speech at a meeting of G20 finance ministers and central bank governors in São Paulo, Brazil, where he spearheaded the conversation of instituting a global minimum tax on the world’s 2,781 billionaires.
G20 finance ministers met again in April in Washington, DC, at the Spring Meetings of the International Monetary Fund (IMF) and World Bank. To encourage the attendees to get on board with Zucman’s tax proposal, we projected animations onto the buildings of the IMF and World Bank. One of our members, Abigail Disney, also penned an opinion piece for The Guardian that week with the same message.
So far, five countries – Brazil, France, Spain, South Africa, and Canada – have all backed the idea of instituting a global minimum tax on the world’s richest individuals. The United States, however, is very much another story.
Ahead of a meeting with G7 finance ministers in Stresa, Italy in May, The Wall Street Journal reported that US Treasury Secretary Janet Yellen opposed the global billionaire minimum tax proposal. Our group released a statement expressing our bewilderment at Yellen’s opposition, and pressed her for further clarification. Our comments were picked up in POLITICO and Forbes. Three days later, at a press conference at the G7 meeting, Yellen heeded our call and clarified that she had no objection to instituting a minimum level of taxation on high-income individuals in the United States, but was “not supportive of an international negotiation that would involve all countries agreeing to do it, and to redistribute the proceeds among countries…” Subsequently, our group released another statement, reproduced by Yahoo! Finance, in which we expressed our gratitude for Yellen’s clarification and encouraged her to stay engaged in the negotiations.
Amidst all this back-and-forth with Yellen, our Chair, Morris Pearl, sat for an interview with the Brazilian Presidency’s office. He spoke at length about our organization, our work, and why it is so important for G20 countries to come together and implement a global minimum tax on the world’s richest people. You can read a rough transcript of the interview HERE.
It’s worth noting that, on two occasions this month, President Biden applauded the efforts taken by the Brazilian government to boost international tax cooperation. Following the US State visit to France, President Biden and France’s President Emmanuel Macron released a joint statement to this effect. A week later, the two met again at the G7 Summit in Apulia, Italy. The official communiqué released after the event expressed a similar support for enhanced international tax cooperation and a commitment to work constructively with the Brazilian G20 Presidency on the matter.
That brings us up to today – or, should we say, yesterday. On Tuesday, the EU Tax Observatory, under the direction of Gabriel Zucman, released a report which outlines how a coordinated minimum tax on ultra-high-net-worth individuals could work in practice. The report was commissioned by the Brazilian G20 Presidency following Zucman’s speech in February. The end proposal of the report involves a global minimum tax standard equal to 2% of the wealth of the world’s billionaires. It would not function as a wealth tax, but rather as a “top-off” mechanism to ensure that billionaires pay at least 2% of their wealth annually in income tax, similar to the minimum tax on multinational corporations agreed upon by 136 OECD countries in 2021. (According to the report, today, billionaires pay roughly 0.3% of their wealth in income taxes annually.) Countries could meet the standard in a variety of ways, whether through income taxes, taxes on broad notions of income (e.g. unrealized capital gains), or wealth taxes. In their analysis, Zucman and his team also found that, compared with increases in personal income taxes and estate taxes, only their proposed coordinated minimum tax could adequately address regressivity at the upper end of tax systems.
We couldn’t have timed Zucman’s report better ourselves, as it follows right on the heels of a YouGov poll that our group sponsored which found support for a variety of progressive tax policies among American millionaires. The poll results were picked up by Financial Times and Fortune. The survey polled 800 respondents from May 24th to June 6th who reported having $1 million in assets, not including their home. Top-line findings included:
- 62% agree that rapidly expanding inequality is a threat to democracy
- 62% are supportive of international action to set standards for how we tax the super-rich
- 59% support a 2% tax on billionaire wealth
- 63% support a 2% tax on American households with more than $100 million in wealth
- 91% said the concentration of extreme wealth allows some to buy political influence
We know that the general public supports taxing the rich. We know economists support it. We know millionaires across G20 countries support it. We know politicians support it. And now, we know that American millionaires support it too.
In light of all this, there is no justifiable reason why Secretary Yellen should withhold her support for the G20 coordinated minimum tax proposal. Zucman’s report makes clear that the proposal would not have any redistributive element and would merely act as a floor to ensure that billionaires fulfill their civic duty and pay some degree of income tax every year like working people do.
In our increasingly connected world, countries are hard-pressed to achieve any goal by going it alone, and tax fairness is no exception. If they’re in the mood to avoid tax, billionaires can move their capital to low-tax jurisdictions pretty much with the click of a button. If all countries agree to a minimum tax standard for the world’s wealthiest individuals, we can stop this “race to the bottom” and take critical steps forward in achieving tax fairness here at home.
This policy should be a no-brainer for anyone who cares about tax justice, and that includes Secretary Yellen. We’ve said it many times over the last few months, and you can rest assured that we’ll continue to do so, especially in the lead-up to the next G20 finance ministers’ meeting at the end of July.