Luiz Inácio Lula da Silva, the radical leftist President of Brazil currently hosting the G20 summit in Rio de Janeiro, will tell attendees Monday the time has come for a global taxation impost on ultra wealthy individuals.
At a July meeting of G20 finance ministers in Rio, the world’s wealthiest nations agreed to start a “dialogue on fair and progressive taxation, including of ultra-high-net-worth individuals,” despite fierce resistance from the United States and Germany.
Now Lula says the time has come for action as he hopes to move the wealth tax plan forward as the money raised from billionaires will help boost other pressing global issues, Deutsche Welle reports.
The German outlet explains how the impost would work:
Devised by French economist Gabriel Zucman, the plan would introduce an annual tax of 2% on the total net worth of extremely wealthy individuals — not just their annual income. This would include real estate assets, corporate shareholdings and other investments. Zucman has estimated that the top 0.01% of the population pay an effective tax rate of just 0.3% of their wealth.
The new levy could raise up to $250 billion (€237 billion) a year from the nearly 2,800 billionaires globally, who have a combined net worth estimated at some $13.5 trillion, according to the Forbes Richest World’s Billionaires List. The funds raised would be used to tackle growing global inequalities, especially among heavily indebted low-income countries, including many in Africa.
Developing nations, which claim to be disproportionately affected by climate change, have for years demanded funding to offset its worst impacts.
The Organisation for Economic Co-operation and Development (OECD) has also called for raising taxes on the world’s wealthiest people, their assets, their properties, and big business while alleviating soaring debt obligations of smaller countries.
At the same time the unelected 38-nation group is cautioning governments to rein in their spending through enhanced fiscal discipline, as Breitbart News reported.
Not everyone is as convinced as Lula or the OECD about the efficacy of punitive taxation on the world’s top wealth creators.
“Most of the G20 countries are having a hard time balancing their budgets,” Maria Antonieta Del Tedesco Lins, an economist and associate professor at the University of Sao Paulo in Brazil, told DW.
“While extra taxes would help, it’s very hard to juggle national pressures with new international or multilateral obligations.”
The Brazilian government is the principal backer of the proposed tax on the super-rich, along with France, Spain and South Africa while Washington remains firmly opposed.
U.S. Treasury Secretary Janet Yellen told the Wall Street Journal in May the measure was “something we can’t sign on to.”
President-elect Donald Trump has yet to comment on the proposal but is unlikely to back hiking taxes on the super-rich.
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