Former World Leaders Push G20 to Set Global Wealth Tax on Billionaires

Former world leaders on Thursday called on the Group of 20 to follow through on a Brazilian proposal to enact a minimum wealth tax on billionaires.

In an open letter, 19 members of the Club de Madrid, a group of former presidents and prime ministers, urged G20 leaders to act on the proposal, calling it a "rare strategic opportunity" to address "extreme inequality" across the world and the inequities in governance systems that have made it so that billionaires "pay a lower tax rate than teachers and cleaners."

"Billionaires, globally, are paying a tax rate equivalent to less than 0.5% of their wealth," the letter, which Oxfam helped coordinate, states. "Trillions of dollars that could have been productively invested in communities, education, health, and infrastructure have instead been unproductively accumulated by the ultra-wealthy."

Michelle Bachelet, former president of Chile and a signatory to the letter, echoed the need for global action in a statement that accompanied the letter. "We need a world in which the wealthiest are taxed in every country, and not allowed to dictate the rules for their own benefit," she said. "Brazil is showing us how."

Brazil, which currently holds the rotating G20 presidency, proposed the minimum wealth tax in February, suggesting the revenues could be used to fund clean energy transitions in the Global South. President Luiz Inácio Lula da Silva's government tasked Gabriel Zucman, a left-wing economist based at the Paris School of Economics and the University of California, Berkeley, with developing the plan, a blueprint of which he released last month.

Zucman, founder of the EU Tax Observatory, calls for a 2% annual tax on billionaire wealth, which he said would raise $200 billion to $250 billion per year from about 3,000 individuals. More tax revenue could be raised if the levy applied to individuals with a net worth above $100 million, he said.

A raft of research on extreme inequality and inequitable tax policy has emerged in recent years, by Zucman and others. An Oxfam report from February found that a yearslong "war on fair taxation" in G20 countries led the wealthiest 1% to have their tax rates slashed by one-third over the last few decades.

Brazil's proposal has gained some momentum in recent months, drawing support from France and the International Monetary Fund. The general public in G20 countries strongly supports a wealth tax, a survey released last month shows.

However, the proposal has faced setbacks. U.S. Treasury Secretary Janet Yellen expressed opposition in May, drawing criticism from progressive groups; last month, Sen. Bernie Sanders (I-Vt.) and Rep. Ilhan Omar (D-Minn.) pushed the administration to support the G20 proposal. Germany's finance minister also said his government was skeptical.

Such leaders will have to be convinced if the plan is to move forward. The Club de Madrid letter praises the Biden administration for a proposal it made in March to increase taxes on U.S. corporations and billionaires, but warns that such taxes in individual countries will not be fully effective, as "global capital does not respect national borders." If one country enacts a wealth tax, billionaires can move their money to more advantageous jurisdictions.

"Tax avoidance and evasion by the ultra-rich succeeds when governments fail to work together," the letter says. "We need global cooperation."

A global minimum wealth tax would strengthen national efforts, reducing inequality and helping governments raise money for much-needed social initiatives, the authors argue. It would also lay the groundwork for further international cooperation.

"A global deal to tax the ultra-rich would be a shot in the arm for multilateralism: proving that governments can come together for the common good," the letter says.

The former presidents and prime ministers cite another recent international tax project—to establish a global minimum tax (GMT) on corporations—as a model. More than 100 countries, including the U.S., agreed on the GMT in 2021 and its implementation is ongoing. It's expected to raise $220 billion more in tax revenues annually, which can be used for social services.

The G20 includes 19 major countries, the European Union, and the African Union. Its next major summit will be in Rio de Janeiro in November.