A 2% global tax on all billionaires could raise $250 billion annually, a research report backed by a Nobel Prize-winning economist says

• Billionaires worldwide should have to pay a 2% wealth tax, the EU Tax Observatory says.
• Its researchers estimated that this would raise close to $250 billion annually.

Billionaires should have to pay a 2% global minimum tax imposed by governments, researchers at the EU Tax Observatory say.

They listed the tax as a key proposal in their Global Tax Evasion Report and argued that it would raise close to $250 billion annually.

The group's researchers said that the number of taxpayers affected by the proposal would be "very small," citing the 2022 World Inequality Report which estimated that there are around 2,750 billionaires worldwide, and that they would only be paying a "very modest" tax rate.

"Even so, the revenue potential is large, due to the concentration of wealth at the top of the distribution and the low current tax rates of billionaires," the researchers wrote in the report, released Sunday. The taxes would be paid to the main country each billionaire resides in.

The EU Tax Observatory is a research laboratory co-funded by the European Union and based at the Paris School of Economics.

Its researchers said that the tax would mimic the 15% global minimum tax introduced for multinational companies.

Currently the world's billionaires collectively pay around $44 billion a year in individual income taxes and wealth taxes, the researchers wrote. Introducing a 2% minimum wealth tax would boost this by about $214 billion, the researchers estimated.

"It is time to establish a global minimum tax on the very rich," Joseph Stiglitz, an economist, scholar, and Nobel Prize winner, wrote in a foreword to the report. "This may seem impossible to attain, but so was undermining bank secrecy and introducing a minimum tax on corporations just a few years ago."

Studies show that billionaires have "very low" individual income taxes and wealth taxes, on average between 0% and 0.5% of their wealth, the researchers wrote.

"When expressed as a fraction of income and considering all taxes paid at all levels of government beyond personal taxes … the effective tax rates of billionaires appear significantly lower than those of all other groups of the population," they wrote.

One reason why billionaires generally have low effective tax rates is that in many countries they can use personal wealth-holding companies to distribute dividends and avoid paying income taxes, the researchers wrote.

A 2020 paper by academics from the London School of Economics and King's College London that studied 50 years of tax cuts for the rich argued that they don't "trickle down" to the rest of the economy.

Appetite for wealth taxes is growing, in part because of rising inequality. The pandemic exacerbated this: The rich got richer and the poor got poorer. Advocates want the tax to go towards, among other things, childcare, affordable housing, and education.

"So many people struggle to make ends meet yet pay the taxes their governments ask of them," Stiglitz continued. "We need to make sure those at the top of the income ladder who certainly have the financial means don't wriggle out of them."

"Glaring tax disparity undermines the proper functioning of our democracy; it deepens inequality, weakens trust in our institutions, and erodes the social contract," he wrote.

Other measures that the observatory's report called for included increasing the minimum corporate tax rate to 25% and removing loopholes from it, creating a global asset registry, and introducing mechanisms to tax wealthy people who have been long-term residents in a country and move to a low-tax country.