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Former heads of state urge Biden and G-20 to approve global tax on super-rich | International

All major international debates on tax issues must first be conducted through the United States and from there continue their way to other global economies such as Germany, France, Italy or Japan. For this reason, 19 former heads of state and government have written a letter calling on US President Joe Biden and other G-20 leaders to support a new proposal that would impose a special tax on the world’s 3,000 richest people, with the aim of raising up to $250 billion (about 231 billion euros) a year worldwide.

“Taxing the super-rich enjoys strong popular support across the world and across all political camps, including among the super-rich themselves. The leadership of the G-20 was crucial in reaching a global agreement on a minimum corporate tax. Now it is time to do the same with the super-rich,” says the letter, which was seen by EL PAÍS. The signatories include Dominique de Villepin, Stefan Löfven, Jan Peter Balkenende, Yorgos Papandreou, Julia Gillard and Felipe González, former prime ministers of France, Sweden, the Netherlands, Greece, Australia and Spain. Other signatories included Michelle Bachelet, former president of Chile, Kim Campbell, former prime minister of Canada, and Alfred Gusenbauer, former chancellor of Austria.

The former political leaders explain in the document that the world’s great fortunes “pay a lower tax rate than teachers and cleaners”. At the global level, they argue, billionaires pay less than 0.5% of their wealth, resulting in billions of dollars “that could have been productively invested in education, health or infrastructure” being “unproductively accumulated”. The result of this spiral is “extreme inequality”, a phenomenon that leads to “too many people feeling that the social contract has been broken and that their democracies have failed them”. For all these reasons, the tax proposal is “strategic and necessary”.

A few weeks ago, the Brazilian G20 presidency presented the conclusions of a report by the renowned French economist Gabriel Zucman, director of the European Union’s tax observatory. The document proposes that individuals whose wealth exceeds one billion dollars (about 935 million euros at the current exchange rate) should pay at least two percent of their wealth annually. This would allow governments around the world to collect between 200 and 250 billion dollars annually.

The plan is already supported by Spain, France, Brazil, South Africa, Colombia and Belgium, according to Zucman. But to make it feasible, international leaders know that a boost from Washington and the other capitals of the world’s largest economies would be very useful. “It is rare, in fact, to find a proposal that calls us, as former heads of state and government, to unite and that we also recognize as politically possible. This one is clearly that,” add the signatories of the letter, which was coordinated by the Club of Madrid, the world’s largest forum of former heads of state and government, in collaboration with Oxfam Intermón.

Zucman’s plan would require individuals with total wealth of more than $1 billion – including assets, real estate, stocks, corporate holdings and more – to pay a minimum tax of 2 percent of their wealth annually, unless they already pay that amount in income tax. As with the 15 percent global minimum corporate tax, this framework would also give countries the ability to claim the corresponding portion of the tax as a last resort if other countries forgo the income.

The proposal is based on the idea that this 2% contribution should be calculated on the basis of wealth rather than income, as this value is more difficult to manipulate and hide. In the baseline scenario, the additional revenue for governments would average more than $80 million per person of the 3,000 ultra-high net worth individuals required to pay the tax. Extending the framework to people with net worths above $100 million would generate additional revenues of $100 to $140 billion per year; if the rate were 3%, revenues would be between $550 and $690 billion, 55% of which would come from billionaires.

Global coordination

In the letter, addressed to heads of state and government such as Joe Biden, German Chancellor Olaf Scholz and the new British Prime Minister Keir Starmer, the signatories stress the need for global coordination. They cite as an example the new global minimum corporate tax of 15% for multinational companies agreed within the OECD.

“National action is essential. We must tax the income of billionaires in every country,” the letter demands. However, they add, “national measures alone can only help so much,” because global capital does not respect national borders and tax evasion and avoidance by the super-rich “succeeds when governments do not work together.” For this reason, “we need global cooperation.”

Former heads of state admit they know first-hand what “the reality of political office” and its limitations are like, “including the pressures that weigh on them.” Nevertheless, they are calling on current leaders to show global leadership and build a new consensus on tax. “We stand ready to support you in this agenda.”

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