The G20 is contemplating a groundbreaking global minimum tax on 3,000 billionaires. Leaders have convened in São Paulo to explore the prospects of an internationally agreed backstop to tax hypermobile wealthy individuals.

Following the success of a 15% global minimum tax on multinational companies implemented in January, international cooperation is now intensifying to combat tax avoidance by the super-rich. Holding the G20 presidency, Brazil is spearheading efforts to promote the proposed global minimum tax policy ahead of the world leaders’ summit in Rio de Janeiro this autumn.

Brazil’s Finance Minister Fernando Haddad, an advocate for the global minimum tax, highlighted the necessity of preventing the wealthiest individuals from evading taxes to ensure fairness in taxation. France’s Finance Minister Bruno Le Maire encouraged Europe to lead in implementing the proposed tax.

The initiative draws inspiration from the 2021 agreement among 140 countries to impose a 15% global minimum tax rate on major multinational companies. Gabriel Zucman, an economist invited by the Brazilian government to initiate G20 talks, stresses that these discussions will ignite a conversation about a global minimum tax on individuals and the super-rich.

The EU Tax Observatory, led by Zucman, proposed a mechanism for a global wealth tax, suggesting a 2% annual levy on the world’s wealthiest individuals. This tax, if implemented, could generate an estimated $250 billion annually from the 2,756 known billionaires with a total wealth of $13 trillion.

Many billionaires exploit holding companies, offshore trusts, and other structures to pay significantly lower tax rates than the general population. The EU Tax Observatory estimates that billionaires pay the equivalent of 0-0.5% of their wealth in personal income taxes using various financial mechanisms.

Tax justice campaigners consider the ongoing discussions in Brazil to be a pivotal moment, describing it as a historic step toward fair wealth distribution. In his opening remarks, Haddad urged counterparts to unite in ensuring that billionaires contribute their fair share in taxes, linking uneven wealth distribution to climate policy.

Gabriel Zucman remains optimistic about the prospect of a global agreement on minimum taxation for the super-rich. He acknowledged challenges in predicting the timeline for this agreement but expressed confidence in the international community’s growing recognition of the necessity for such cooperation.

Zucman cited the unsustainable global situation where the wealthiest 1% own 43% of the world’s financial assets and emit the same carbon as the poorest two-thirds of humanity.

The debate unfolds against resistance in some countries, such as the UK’s Labour Party ruling out new wealth taxes if elected. Additionally, some nations, including the US, are yet to ratify the global minimum corporate tax deal, facing challenges in garnering political support in various jurisdictions.