Commissioned by the G20, this report presents a proposal for an internationally coordinated standard ensuring
an effective taxation of ultra-high-net-worth individuals. In the baseline proposal, individuals
with more than $1 billion in wealth would be required to pay a minimum amount of tax
annually, equal to 2% of their wealth. This standard could be flexibly implemented by
participating countries through a variety of domestic instruments, including a presumptive
income tax, an income tax on a broad notion of income, or a wealth tax. The report presents
evidence that contemporary tax systems fail to tax ultra-high-net-worth individuals effectively,
clarifies the case for international coordination to address this issue, analyzes implementation
challenges, and provides revenue estimations. The main conclusions are that (i) building on
recent progress in international tax cooperation, such a common standard has become
technically feasible; (ii) it could be enforced successfully even if all countries did not adopt it,
by strengthening current exit taxes and implementing “tax collector of last resort” mechanisms
as in the coordinated minimum tax on multinational companies; (iii) a minimum tax on
billionaires equal to 2% of their wealth would raise $200-$250 billion per year globally from
about 3,000 taxpayers; extending the tax to centimillionaires would add $100-$140 billion; (iv)
this international standard would effectively address regressive features of contemporary tax
systems at the top of the wealth distribution; (v) it would not substitute for, butsupport domestic
progressive tax policies, by improving transparency about top-end wealth, reducing incentives
to engage in tax avoidance, and preventing a race to the bottom; (vi) its economic impact must
be assessed in light of the observed pre-tax rate of return to wealth for ultra-high-net-worth
individuals which has been 7.5% on average per year (net of inflation) over the last four
decades, and of the current effective tax rate of billionaires, equivalent to 0.3% of their wealth.
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A Blueprint for a Coordinated Minimum Effective Taxation Standard for Ultra-High-Net-Worth Individuals
25 Jun 2024
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Citation
Zucman, G., 2024. A Blueprint for a Coordinated Minimum Effective Taxation Standard for Ultra-High-Net-Worth Individuals, G20.
Retrieved from https://coilink.org/20.500.12592/zgmsjj8 on 07 Sep 2024. COI: 20.500.12592/zgmsjj8.
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