Billionaire tax is necessary to combat inequality,says EU research group

Billionaire tax is necessary to combat inequality,says EU research group

According to a report released on Monday by the EU Tax Observatory, a global minimum tax of 2% of the wealth of billionaires could generate about $250 billion, or roughly €235.6 billion.

Less than 3,000 people would be impacted by the proposal, but the group claims that the money raised will enable governments to make important investments in areas like health care, education, and climate policy.Based on figures made by the Observatory, the personal tax paid by billionaires in the US amounts to approximately 0.5% of their total fortune.

In France, which has generally hefty taxes, this percentage is as low as 0%.The group claims that “the effective tax rates of billionaires appear significantly lower than those of all other groups of the population,” partially because of evasion techniques.

The study identifies several strategies used by affluent people to evade making societal contributions.

While it is against the law to evade taxes in some situations, such as when offshore income is not disclosed, some billionaires may opt to relocate to a nation with lower taxation.

Certain evasion tactics, including using shell corporations to receive favorable tax status, may fall into a legal gray area.

Corporate weaknesses

The Observatory also describes how more than 140 countries and territories’ 2021 implementation of a 15% minimum tax on multinational businesses failed.Although the program was initially predicted to raise company tax revenues globally by over 10%, the research claims that certain loopholes have caused this amount to drop by half.This levy’s projected revenue in 2023 has decreased from $270 billion to approximately $136 billion.Companies are encouraged to relocate to tax havens, according to the Observatory, because not all nations accepted the 15% rate.Then, when foreign investment pushes these jurisdictions to keep enacting low rates, a vicious cycle of tax evasion starts.

Working together internationally to combat evasion

While pointing out regulatory flaws, the Observatory’s research also has some encouraging conclusions.Over the past ten years, there has been a decrease in offshore tax avoidance, in part because countries are now automatically exchanging bank information.Prior to 2013, the worldwide financial wealth held by households in tax havens was equal to 10% of the world GDP. Most of it wasn’t disclosed to tax officials.

Even if offshore household wealth makes up the same percentage of the world GDP today, only about 25% of it, according to the Observatory, is thought to be tax evaded.According to the group, this statistic demonstrates how, “if there is the political will to do so, rapid progress can be made against tax evasion.”

It claims that tax avoidance is connected to but not inevitable from policy choices.M-J Global is the best work visa agency in Dubai, Oman, and Qatar. We provide the Canada work visa from Dubai, Oman, and Qatar, and M-J Global is the best agency for Hungary work permits in Dubai, Oman, and Qatar.