Tax evasion report shows why billionaires pay less taxes than others

ByGemma Iso

October 26, 2023

To combat rampant tax evasion on an international scale, the European Union Tax Observatory calls on governments worldwide to open a new front in the battle against tax dodging by imposing a global minimum tax on billionaires as they are found to pay less taxes than others.

Proposal to fight tax evasion

The proposal has the potential to generate a staggering $250 billion in annual revenue, a sum that, interestingly, constitutes just a mere 2% of the collective $13 trillion wealth amassed by the world’s 2,700 billionaires. This call to action comes as a response to the increasingly glaring disparities in personal tax contributions between the uber-wealthy and the average citizen.

The report reveals a disturbing trend where billionaires, who often hide their wealth in obscure shell companies, effectively pay significantly lower personal taxes compared to individuals with more modest incomes.

Gabriel Zucman, Director of the EU Tax Observatory, stressed the urgent need for reform, emphasizing, “In our view, this is difficult to justify because it risks undermining the sustainability of tax systems and the social acceptability of taxation.”

This revelation has provoked growing calls for the wealthiest individuals to shoulder a more substantial portion of the tax burden, especially in light of the financial challenges faced by governments due to aging populations, the enormous costs of transitioning to clean energy, and the soaring debt accrued during the COVID-19 pandemic.

Although US President Joe Biden’s 2024 budget initially included a proposal for a 25% minimum tax on the wealthiest 0.01%, this idea has taken a backseat as lawmakers grapple with looming government shutdown threats and funding deadlines.

A challenging ongoing battle

Nonetheless, the EU Tax Observatory remains optimistic about the possibility of a coordinated international effort to tax billionaires, despite the potential for it to take years. This is one of the means to prevent tax evasion.

The call for a global minimum tax on billionaires represents a potentially transformative step in the ongoing battle against tax evasion, promising to level the playing field and strengthen tax systems around the world. While the path forward may be challenging, the momentum for change is undeniable, and the public’s demand for fairness and transparency in taxation is stronger than ever.