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tax justice
G20 Leaders Reach 'Landmark Commitment' for Global Tax on Ultrarich
"Now is the time to turn words into action and launch an inclusive international negotiation, extending beyond G20 countries, on the reform of the taxation of the superrich," said economist Gabriel Zucman.
Nov 19, 2024
Acknowledging that "the era of the billionaire" is still in full swing across the globe, economic justice advocates on Tuesday applauded a "landmark commitment" by G20 leaders at the group's annual summit in Rio de Janeiro, where delegates agreed to cooperate on efforts to ensure the richest households in the world are taxed fairly.
The final communiqué out of the G20 Summit includes a commitment from 19 countries, the European Union, and the African Union, to "engage cooperatively to ensure that ultra-high-net-worth individuals are effectively taxed."
"Cooperation could involve exchanging best practices, encouraging debates around tax principles, and devising anti-avoidance mechanisms, including addressing potentially harmful tax practices," reads the communiqué. "We look forward to continuing to discuss these issues in the G20 and other relevant forums, counting on the technical inputs of relevant international organizations, academia, and experts."
The final text was brokered by Brazilian President Luiz Inácio Lula da Silva, commonly known as Lula, and the E.U. Tax Observatory noted that Argentina's right-wing president, Javier Milei, "failed to convince other G20 countries to block the communiqué."
The meeting took place less than a year after economist Gabriel Zucman, director of the E.U. Tax Observatory, published a report titledA Blueprint for a Coordinated Minimum Effective Taxation Standard for Ultra-High-Net-Worth Individuals, which informed G20 finance discussions leading up to the summit.
"A minimum tax on billionaires equal to 2% of their wealth would raise $200-$250 billion per year globally from about 3,000 taxpayers; extending the tax to centimillionaires would add $100-$140 billion," said Zucman, a leading expert on tax avoidance and reducing inequality, in the report.
Billionaires' effective tax rate is currently equivalent to 0.3% of their wealth, requiring them to pay a far lower rate than middle-class taxpayers.
Zucman hailed the agreement out of the summit in Rio de Janeiro as a "historic decision" and said concrete action by the world's governments must follow.
"Now is the time to turn words into action and launch an inclusive international negotiation, extending beyond G20 countries, on the reform of the taxation of the superrich," said Zucman.
Along with Milei, the Biden administration pushed back this year as the G20 weighed Zucman's tax proposal. Treasury Secretary Janet Yellen toldThe Wall Street Journal in May that the "notion of some common global arrangement for taxing billionaires with proceeds redistributed in some way—we're not supportive of a process to try to achieve that. That's something we can't sign on to."
As Common Dreamsreported Tuesday, the U.S. is one of eight countries that are contributing to an international loss of $492 billion in taxes each year as multinational corporations and ultrawealthy individuals underpay. The eight countries—which also include Australia, Canada, Israel, Japan, New Zealand, South Korea, and the U.K.—oppose a United Nations tax convention.
Jenny Ricks, general secretary of the Fight Inequality Alliance, said that particularly with U.S. President-elect Donald Trump set to take office in January, "we live in the era of the billionaire."
"We need to move to the era of the 99%," said Ricks. "This shift won't come easily. The U.S. elections have shown how the superrich can use their wealth and power to influence policies and shape the outcomes of elections. Leaders like Trump in the U.S. and Javier Milei in Argentina are actively working to derail international cooperation, while politicians around the world fail to oppose the vested interests that continue to benefit from such unequal societies."
"We will fight harder than ever before to transform the rhetoric on taxing the rich into a global reality," she added. "We need more equal societies in which the richest no longer hold all the power and wealth, with devastating consequences. We need to redistribute the wealth of the superrich to fund vital public services and the response to climate change. Such a transformation is essential to creating the alternative we seek to today's broken system."
Viviana Santiago, executive director of Oxfam Brazil, applauded Lula's government and the G20 leaders for responding "to people's demands worldwide to tackle extreme inequality, hunger, and climate breakdown, and particularly for rallying action on taxing the superrich."
"G20 governments deserve praise for their groundbreaking commitment to cooperate on taxing the world's superrich. But we won't rest until this delivers real change for people and planet," said Santiago, adding that governments now ostensibly supporting a tax on billionaires' wealth should also "be championing a $5 trillion climate finance goal at COP29," the U.N. summit set to wrap up in Baku, Azerbaijan this week.
"How can they argue that climate justice is unaffordable with a deal to raise trillions of dollars by taxing the superrich on the table?" she asked.
Quentin Parrinello, policy director at the E.U. Tax Observatory, asserted that negotiations on the tax proposal "must now extend to a much more inclusive space than the G20."
"Such reforms don't happen overnight, but time is pressing," said Parrinello. "This agenda is even more important today, with the risk of geopolitical fragmentation and looming wealth concentration fueling inequality and undermining democracy."
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‘Long-Overdue Justice’: EU Court Rules Ireland Let Apple Avoid $14.4 Billion in Taxes
"This ruling exposes E.U. tax havens' love affair with multinationals."
Sep 10, 2024
The European Union's highest court on Tuesday ruled that Apple must pay €13 billion in back taxes to Ireland, determining that the country gave the company illegal tax benefits in the past, in what campaigners called a victory for tax justice.
The E.U. Court of Justice ruling brought to a close a landmark case that began in 2016 when the European Commission ordered Apple to pay the €13 billion ($14.4 billion) based on an unfair tax arrangement the company had with Ireland from 1991 until 2014. A lower court overturned the commission's order in 2020, but Tuesday's ruling, which is final, restores it.
Observers viewed the case as among the most important brought by E.U. Competition Commissioner Margrethe Vestager, an antitrust official who's been in office since 2014.
"It's important to show European taxpayers that once in a while, tax justice can be done," Vestager, who leaves office in two weeks, said following Tuesday's ruling.
Chiara Putaturo, a tax policy adviser at Oxfam EU, said in a statement that "this ruling exposes E.U. tax havens' love affair with multinationals. It delivers long-overdue justice after over a decade of Ireland standing by and allowing Apple to dodge taxes."
Today is a huge win for European citizens and tax justice.
👉In its final judgment, @EUCourtPress confirms @EU_Commission 2016 decision: Ireland granted illegal aid to @Apple.
Ireland now has to release up to 13 billion euros of unpaid taxes.
— Margrethe Vestager (@vestager) September 10, 2024
The European Commission argued that the selective tax benefits that Ireland had offered to two Apple subsidiaries amounted to illegal state aid that hindered competition. The company's tax burden in Ireland, where its European operations have been based since 1980, was as low as 0.005% of its profits in 2014.
In November of last year, Giovanni Pitruzzella, the advocate general of the E.U. Court of Justice, issued an opinion in favor of the commission's position and against the lower court ruling, in a setback for the tech giant. The high court, which is based in Luxembourg, generally agrees with its advocate general following such recommendations, as it ultimately did on Tuesday.
The €13 billion, plus interest, has been held in an escrow account since 2018 and will be released to Ireland, even though the country fought against the commission's order. Ireland said it would respect the court ruling.
Ireland is often characterized a tax haven within the E.U. and hosts the European headquarters for many multinational firms, with critics charging that its tax system drives up inequality.
Tax justice campaigners said Tuesday's ruling should just be a start and that more fundamental reforms are needed at the international and E.U. level.
"Our tax problem is more than just one rotten apple," Tove Maria Ryding, a policy manager at the European Network on Debt and Development, said in a statement.
"The international system for taxing multinational corporations continues to be deeply complex, unpredictable and unfair," she added, arguing that a company's economic activity across many countries, including in the Global South, shouldn't mean tax revenues only for one country such as Ireland.
Ryding praised the United Nations' efforts to establish a global tax convention, calling the proposal a "beacon of hope for a fairer future."
Putaturo of Oxfam likewise called for a fairer tax system in Europe.
"While this ruling will force the tech giant to pay its debt, the root of the issue is far from solved," she said. "E.U. tax havens can still make sweetheart tax deals with big multinationals. The duty to stop this rests on the shoulders of E.U. policymakers. Yet, they have turned a blind eye to tax havens within their borders and the harmful race to the bottom that countries like Ireland are instigating."
Oxfam EU also called for the closing of tax loopholes and the establishment of a wealth tax.
The Apple case was not the only victory for Vestager, the antitrust chief, on Tuesday: The E.U. Court of Justice also ruled that Google had illegally used its search engine dominance to favor its own shopping service, fining the company €2.4 billion ($2.65 billion).
Bloomberg on Tuesday called it a "double boost to the European Union’s crackdown on Big Tech," and said that Vestager's past work had "paved the way" for the U.S. and the U.K. to take action against Google.
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Massachusetts Proves It Is Possible to Make the Wealthy Pay Their Fair Share
With three months still left in the state fiscal year, the new Massachusetts millionaires tax has already generated $1.8 billion in added new revenue, some $800 million more than state officials had projected.
May 26, 2024
This spring has been an exceedingly good one for Flightline Aviation Limited, a London-based enterprise that specializes in helping the world’s deepest pockets find the private jet of their dreams.
“We have closed six sales in the past five weeks,” Flightline’s Anna Campbell gushed at London’s most celebrated luxury trade fair earlier this month. “Everyone seems to want to get a plane for summer.”
Polly Toynbee, a veteran British political columnist, happened to be at that same trade fair. She watched one gentleman talking with a salesman about a showcased private plane and then approached that potential buyer with a question. With so many families struggling to put food on the table, Toynbee asked, shouldn’t the U.K.’s richest be paying “a bit more” in taxes?
“Why would I?” the private-jet aficionado replied.
“Look,” he added, waving at the aircraft on sale all around him, “take any more in tax and the wealthy would be off—away out of here in one of these!”
Before the Fair Share Amendment’s passage, wealthy Massachusetts taxpayers averaging $2.4 million in annual income were only paying 6.8% of that income in state and local taxes.
Off to a place, that gentleman of means was implying, smart enough not to inconvenience its richest residents with any sort of robust tax on income or wealth.
The rich who call the U.K. home have, at the moment, little reason to start looking for one of those tax-getaway locales. Britain’s Labour Party, the likely winner in the nation’s next parliamentary elections, is showing no interest whatsoever in subjecting the U.K.’s richest to any significant tax hike.
“We have no plans for a wealth tax,” Rachel Reeves, the Labour Party’s likely choice for finance minister, announced last summer—and no plans either to put in place a mansion tax or a higher levy on either capital gains or top tax-bracket income.
“I don’t see the way to prosperity as being through taxation,” Reeves went on. “I want to grow the economy.”
The British economy is already growing quite nicely—for the U.K.’s wealthiest. Since 1989, the University of Greenwich economist Ben Tipper points out, the nation’s 200 richest residents have seen their wealth—after taking inflation into account—grow on average by 15% per year.
Throughout human history, adds the U.K. High Pay Center’s Luke Hildyard, living standards for average households have only improved when societies have in place mechanisms “to ensure that wealth doesn’t overwhelmingly flow to the people with all the economic and political power.”
Given that reality, Hildyard posits in his just-published Enough: Why it’s Time to Abolish the Super Rich, modern societies need to both tax the top 1% “more effectively” and get those wealthy to pay more “to the workers at the companies they run and invest in.”
How best to accomplish all that? Progressives in the United States—the only U.K. peer nation with less of a tax burden on its richest—have plenty of ideas on that score. This past week we learned that one of those ideas is generating some encouraging results.
The back story: In 2022, after seven years of dedicated volunteer labor, the Raise Up Massachusetts coalition of over 150 community organizations, faith-based groups, and labor unions had worked onto the November statewide ballot a constitutional amendment to add what amounted to a special tax on millionaires to the state constitution.
This “Fair Share Amendment” called for adding a 4% state tax on annual income over $1 million to the state’s existing 5% flat-rate income tax. That $1 million threshold, the amendment also spelled out, would adjust annually to reflect cost-of-living increases.
The proceeds from this special new levy on wealthy taxpayers would all go for public education and maintaining and improving the state’s public transit, roads, and bridges.
Voters turned out to like that notion. The Fair Share Amendment passed comfortably, with over 52% of the vote, and went into effect last year.
“The message sailed past billionaire money to victory,” as Jacobin contributing editor Paul Prescod has noted, “because it was clear, compelling, and broad-based: Make the rich pay so we have more revenue to improve the lives of working people.”
How much of a difference has the new Massachusetts levy on millionaires so far made? The Boston Globe earlier this week headlined the surprising answer: “‘Millionaires tax’ has already generated $1.8 billion this year for Massachusetts, blowing past projections.”
Way past projections. With three months still left in the state fiscal year, the new Massachusetts millionaires tax has already generated $1.8 billion in added new revenue, some $800 million more than state officials had projected the tax would raise in their budget for the entire fiscal year.
“Opponents of the Fair Share Amendment,” exulted Raise Up Massachusetts spokesperson Andrew Farnitano, “claimed that multi-millionaires would flee Massachusetts rather than pay the new tax, and they are being proven wrong every day.”
That doesn’t surprise Omar Ocampo, a Massachusetts-based analyst with the Institute for Policy Studies. Research from other states, he notes, demonstrates that instances of “millionaires fleeing increased taxes” turn out to be “extremely rare.”
Before the Fair Share Amendment’s passage, wealthy Massachusetts taxpayers averaging $2.4 million in annual income were only paying 6.8% of that income in state and local taxes, a rate less than the 8.9% of their incomes that taxpayers in the state’s bottom 99% were paying.
The new Fair Share Amendment, estimates the Institute on Taxation and Economic Policy’s Marco Guzman, will raise the combined Massachusetts state and local tax rate on the state’s richest, but only to 8.7%.
In other words, advocates for tax justice in Massachusetts—like advocates for greater equality across the United States and all around the world—still have plenty of victories that need winning. But let’s make sure that we celebrate each victory along the way!
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