Consider This from NPR - A proposal to tax the rich is gaining traction. But is it feasible?

Episode Date: August 4, 2024

Over the last decade, calls to tax the rich have grown louder around the world — but the needle hasn't exactly moved. Now, the Brazilian government has a new proposal: a 2 percent global wealth tax on the uber-rich. It would impact the 3,000 wealthiest people around the world.Economists say this 2 percent hike would unlock an extra $250 billion per year. That money could go toward addressing a number of issues, like climate change and global poverty.G20 nations would have to agree on this proposal before it goes anywhere — and so far, that's not happening. France, Spain, South Africa and several other nations have voiced support, but the U.S. and Germany aren't on board. Is a global wealth tax a feasible solution? For sponsor-free episodes of Consider This, sign up for Consider This+ via Apple Podcasts or at plus.npr.org.Email us at [e-mail] more about sponsor message choices: podcastchoices.com/adchoicesNPR Privacy Policy

Over the past decade, calls to tax the rich have grown louder all around the world. That's the rich, not the poor. We won't take it anymore. If you want to make or can make a million or millions of bucks, that's great. Just pay your fair share in taxes. But the needle hasn't exactly moved. Billionaires are still amassing incredible amounts of wealth, and they are paying less in taxes than they have in decades. The Brazilian government has a new proposal, a 2% global wealth tax on the uber rich. It would affect the 3,000

wealthiest people in the world. 2% might not sound like a lot until you consider just how much billionaires are paying in taxes right now. It is something like 0.3% of their wealth, according to a new report commissioned by the G20. Economists say this 2% hike would unlock an extra $250 billion a year, and that money could go toward addressing a number of issues like climate change or global poverty. But there's still a question of feasibility. How do you coordinate a global tax? G20 nations would have to agree on this proposal before it goes anywhere, and so far, that isn't happening.

France, Spain, South Africa, and several other nations have voiced support, but the U.S. and Germany are not on board. Consider this. Billionaires are getting richer, and calls to tax the uber-rich are getting louder. Is a global wealth tax a feasible solution? From NPR, I'm Scott Detrow. It's Consider This from NPR. Gabriel Zuckman is an economist at the Paris School of Economics and the University of California at Berkeley. He's also the person behind a new global wealth tax proposal that the G20 is kicking around, and he joins us now.

Welcome. Hello. So let's just start with the general idea of how this would work. You're talking about a 2% global tax on the richest people in the world. Why 2%? What would be the criteria for being taxed? Tell me how this works. Well, the starting point is that there is overwhelming evidence that the super rich

think billionaires have very low effective tax rates today. They pay much less tax than middle class people in the US and throughout the world. And the reason for that is because when you're very rich, it's easy to structure your wealth such that this wealth will not generate a lot of taxable income. So we've seen that, for instance, a few years ago with the revelations by ProPublica in the US on the tax payments of Jeff Bezos or Elon Musk and so on. And in some years, you see some of the wealthiest people in the world reporting almost no taxable income and paying very little, almost no individual income tax. And why do you, is that a problem? Is it a matter of fairness? Are there economic reasons behind why you want to change that? So first, there is a big loss of tax revenue

for governments. That's money that we could spend on education, on health, on infrastructure, and that we can't because they don't pay tax. And the other problem is, of course, is a basic fairness issue. It's difficult to understand why the very individuals with the highest ability to pay taxes should be allowed to pay less than ordinary people. And in fact, when you look at opinion polls all over the world, you see that 70%, 80% of voters everywhere think that the super rich don't pay enough in tax and that they should be asked to contribute more. And so the idea is to have countries agree on a principle, a common norm that they would, each of them, implement domestically in various ways. There was a lot of interest in this idea at the recent G20 meeting,

which is the main reason why we're talking about it. But you had some key countries expressing skepticism, including the United States. Treasury Secretary Janet Yellen said this is not an idea she's on board with. I believe Germany expressed opposition as well. If you have two key countries like that in the global economy with hesitation, what's the path forward? So first of all, you have lots of countries that have expressed support. That very much includes Brazil, which is hosting the G20 this year, but also countries like France, like South Africa. In just a few weeks, you've had many countries coming on board.

Second, in the U.S., at least the current administration supports such measures domestically. But it's true that it has been reluctant in pushing that agenda so far at the international level. And I think it's important to do this collectively, right? Because if we don't do this collectively, there is a risk of a race to the bottom of some countries just choosing not to tax billionaires to try to attract them. And the most powerful way to prevent that is through international coordination. That being said, you don't need a global agreement. You don't need a global consensus for this to work. What you only need is a critical mass of countries that would do two things. Number one, they would say, we are going to tax our billionaires. And number two, they would say, we will also tax the billionaires of other countries if they are undertaxed in their home country and if they derive some of their wealth from having access to our countries and to our markets.

How long do you think the runway is to get something like a global agreement on taxing billionaires implemented in the way you're talking about? It's going to take some time. Look, the discussions have started five months ago. In February, Brazil put that issue on the agenda of the G20. It had never been discussed before. The G20 has existed since 1999, and never before had they talked about inequality, extreme wealth, taxing the super rich, you know, some of the most pressing issues of our time. And already in five months, we've made a lot of

progress. That being said, nobody expects that this will become a reality in just a few months. It's going to take a few years. There's been a lot of electoral upheaval in a lot of the key G20 countries, you know, elections all around the globe this year, including here in the United States. Any worry that big leadership changes in countries like the US or others could slow down some of that momentum given this timeline you're talking about? I mean, leadership might change, but what does not change is the overwhelming popular demand everywhere for this type of policy, for fixing this big tax injustice of our time, which allows the super rich to pay less in tax

than their secretaries. And so that's what fundamentally makes me optimistic that at some point, and I hope it will be sooner rather than later, we'll reach a common agreement on that. It's Gabriel Zuckman, an economist at the Paris School of Economics and the University of California, Berkeley. Thank you. Thank you so much.

This episode was produced by Catherine Fink and Avery Keatley. Our executive producer is Sammy Yenigan. And one more thing before we go, you can now enjoy the Consider This newsletter. We still help you break down a major story of the day, but you'll also get to know our producers and hosts and some moments of joy from the All Things Considered team. You can sign up at npr.org slash consider this newsletter. It's Consider This from NPR. I'm Scott Detrow.