Most people pay a higher rate of tax than the super-rich, who are able to use complex business structures to avoid taxation, according to the EU Tax Observatory.
It recommends in a report that the world’s 2 500 billionaires, who have a combined wealth of $13 trillion, should pay a minimum 2% tax rate. This would raise $250bn a year.
The BBC quotes Quentin Parrinello, a senior policy adviser at the EU Tax Observatory, as saying that global billionaires ‘structure their wealth so it does not generate a lot of taxable income’.
Parrinello said that while getting countries to implement a 2% tax on billionaires might sound ‘utopian’, the same was true of ‘the idea of asking Swiss banks to exchange tax information with tax authorities 10 years ago and now this is a central provision of the fight against tax evasion’.
Nobel Prize-winning American economist Joseph Stiglitz said in the introduction to the report that unfairness in taxation posed a risk to democracy.
‘If citizens don’t believe that everyone is paying their fair share of taxes – and especially if they see the rich and rich corporations not paying their fair share – then they will begin to reject taxation.
‘Why should they hand over their hard-earned money when the wealthy don’t? This glaring tax disparity undermines the proper functioning of our democracy; it deepens inequality, weakens trust in our institutions, and erodes the social contract.’
[Image: Joseph Stiglitz, World Economic Forum, https://commons.wikimedia.org/w/index.php?curid=18624082]