(NewsSpace.com) – The concept of taxation for the rich has long been a debate, not just in the United States but across the world. Many believe that those who reach a certain threshold of wealth should pay a minimum tax. The EU Tax Observatory recently released its latest report, which details the tax avoidance strategies of the super-rich. Additionally, it proposes a minimum tax rate that could help raise significant tax income.
Global Tax Evasion Report Findings
The 2024 Global Tax Evasion Report is a comprehensive finding of tax evasion that occurs globally. In its forward, American economist Joseph Stiglitz points out that billionaires have “become more agile at avoiding the taxman.” This isn’t due to unlawful tax evasion methods, however, but loopholes that have been created by policy choices. This, Stiglitz says, is a problem because if “citizens don’t believe that everyone is paying their fair share … they will begin to reject taxation.” The average rate citizens pay is much higher than their billionaire counterparts, who regularly see tax rates of 0% to 0.5%.
The American economist goes even further, saying tax avoidance — like that perpetrated by billionaires who filter their money through shell corporations — undermines democracy, “deepens inequality, weakens trust, […] and erodes the social contract.”
How Billionaires Skirt Taxes
It’s important to note that the report isn’t accusing billionaires of committing crimes in the way they avoid taxes — they do it legally, through business and policy loopholes that allow them to run their money through shell corporations and avoid excessive taxation. According to Quentin Parrinello, an EU Tax Observatory senior policy adviser who spoke with the BBC, the super-rich “structure their wealth” in a manner so that it doesn’t “generate a lot of taxable income.”
The current report acknowledges that 140 countries banded together in 2021 to agree to enact a 15% corporate tax, but a “growing list of loopholes” has weakened that plan.
A Solution in the Works?
One of the proposed solutions — one that’s not likely to go over well — is to implement a 2% billionaire tax. While Parrinello acknowledges that the idea might sound “utopian,” he points out that many other ideas hit the same resistance years ago as well.
The report outlines that there are currently 2,756 billionaires in the world, with the majority in North America (835) and East Asia (838). Currently, their combined wealth is nearly $13 trillion, but they pay only $44 billion in taxes. With the proposed 2% minimum tax, that figure would increase to $214 billion.
Gabriel Zucman, the EU Tax Observatory director, says that the idea of a minimum tax is doable, but it would likely take a “coalition of willing countries” to lead the way.
Copyright 2023, NewsSpace.com