French economist Gabriel Zucman, of the École Normale Supérieure, is campaigning to tax billionaires. He was invited on Thursday February 29 by Brazil to present his work to the G20 finance ministers. Although an agreement on such a tax is still far away, the subject is not taboo.
6 mins
RFI: Gabriel Zucman, you have just returned from Sao Paulo where you were the special guest of Brazil, which is chairing the G20 this year. What was your message there?
Gabriel Zucman: The main message is that the world needs an international agreement for minimum taxation of the ultra-rich. A large number of studies show that their effective tax rate is significantly lower than those of other social categories. Our proposal is therefore as follows: we must create an income tax surcharge to ensure that each year, the 3,000 billionaires identified pay at least the equivalent of 2% of their fortune in taxes. It is estimated that this tax would generate approximately $250 billion in additional tax revenue each year. In 2021, 140 OECD and European Union countries agreed on a minimum tax rate of 15% for multinationals. We must now apply this logic to the question of very large fortunes.
How was your speech received?
What happened in Sao Paulo is truly historic. Most of the participants – ministers, central bank governors, representatives of international institutions – understood the need for a new form of regulation of globalization. That was really the main point of my message. We all need a new form of multilateralism with, as a priority, the fight against the inequalities that otherwise corrupt our democracies. And I believe that this message was heard for the first time by a majority of countries.
This is particularly the case of France which has decided to implement such a tax. Were you surprised by the position of Minister of the Economy Bruno Le Maire?
A number of countries have declared themselves in favor of this proposal. France is one of them, and it is a position that I would like to salute. But she is not alone. Brazil is driving force. I also noted a positive reaction from the American Secretary of the Treasury, Janet Yellen. A certain number of countries are therefore favorable to our idea. This makes me optimistic for the future.
How long do you think it will take for this measure to be adopted?
It’s a new idea, and it raises questions, that’s normal. But I insist on the fact that these questions on the taxation of the super-rich, on tax progressivity, have never been discussed in these forums. I don’t know when this tax can be implemented. A year ? Three years ? Five years ? Ten years ? I don’t know. But I am convinced that it will see the light of day because the logic is unassailable. Current tax injustice weakens democracy.
In the European elections in June, we expect an unprecedented surge in far-right parties in the United States. Donald Trump could return to power in the White House. Can this idea of taxing the richest survive a rise in populism?
Yes, and I think that, moreover, it would be a good response to the phenomenon that you describe. First of all because there is no need for an agreement from all countries for this tax to be implemented. The United States, for example, has not ratified the agreement concerning the 15% minimum tax on multinationals. However, this tax applies in France, the European Union and other countries. The same logic can be applied to the taxation of very large fortunes. Each country is free from its tax policy. We need to be able to attract a significant number of States to make this type of idea work.
In the latest report on tax evasion published by your observatory last October, you noted positive developments, particularly on the banks’ side.
Indeed, we have made progress in the fight against the concealment of assets in tax havens thanks to the automatic exchange of banking data. This form of international cooperation was considered perfectly utopian just ten or fifteen years ago. Since 2018, Swiss, Luxembourg and Cayman Islands banks must communicate their banking data to the competent tax administrations, even though banking secrecy has been complete for decades. With political will, rapid and concrete progress is possible.
But multinationals continue to partially evade taxes…
Indeed, the great tax evasion continues. Even though we have made a lot of progress on tax evasion by multinationals, in particular with the entry into force in certain countries of a minimum tax of 15%. Currently, we estimate that 1 trillion euros of corporate profits are recorded every year in tax havens or are taxed at ultra-low rates.
Does this mean that the 15% minimum tax on multinationals, decided in 2021, does not go far enough?
I began at the beginning of the interview by paying tribute to this agreement. This is a step in the right direction. For the first time, we managed to agree on a global tax on multinationals. However, this text is very unsatisfactory. Firstly because the tax rate of 15% is very low. Then because it is undermined by a series of exemptions and tax loopholes which have been slipped into this text in a pernicious way. Our observatory is therefore sounding the alarm to say that although this agreement is a good basis, we must, however, go much further: get rid of tax loopholes and gradually increase the minimum tax rate to 20 or 25%.
In your report, you provide other recommendations in order to reconcile “globalization” and “social justice”…
We believe that we must also act within a national framework to better tax businesses and high net worth individuals. France does not need to wait for an agreement at the G20 to say that its billionaires must pay a minimum of taxes each year. If we want to reach ambitious agreements, we must not start by setting a constraint of unanimity. On the contrary, we must encourage the emergence of a group of countries that move forward. And we are currently in this dynamic.
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