Billionaires Hate This One Weird Trick: Taxing Them

The global movement to tax billionaires, much to the dismay of the 1%, is gaining steam. Sure, wealth taxes are not a panacea for the ruinous problems caused by capitalism, but the fact that the rich hate them is a good reason to pursue them further.

Elon Musk speaks at the Atreju political convention on December 15, 2023 in Rome, Italy. (Antonio Masiello / Getty Images)

In 2023, the world’s billionaires were worth a collective $12.7 trillion dollars. For a sense of scale, that’s a value roughly half of the 2023 US GDP, which was $23.4 trillion. As Oxfam reports, from 2020 to 2022, the planet’s top 1 percenters took in nearly twice as much wealth as the rest of the world combined. The organization also found that the average billionaire manages to pay a lower tax rate than the workers from whom they derive their wealth.

The wealth of the ultrarich contrasts sharply with people worldwide struggling to make ends meet. People are grappling with declining purchasing power and general immiseration, pushing them to the brink. This is evident in the United States and Canada, where housing crises and high staple prices have made day-to-day survival an uphill battle. Interest rates remain high, and the threat of a recession hangs over the heads of workers.

A Global Tax on Billionaires

In response to the growing and obscene wealth of the ultrarich, Brazil is spearheading a campaign to introduce a global tax on billionaire wealth. As the New York Times reports, the country, which currently heads the rotating chair of the G20, “has taken up the cause with fervor.” Indeed, Lula’s Brazil has been on the billionaire case for some time and is putting up wins with taxing their domestic ultrarich on offshore investments. Now, it’s for an international agreement that would impose this tax worldwide. The measure would limit the capacity of the planet’s richest to stash their wealth in havens and avoid ponying up to meet their tax obligations. Trillions in revenues are lost each year to licit and illicit tax havens used by the ultrarich to shield them from paying anything close to their fair share.

The EU Tax Observatory’s 2024 Global Tax Evasion report found that offshore wealth was equivalent to about 12 percent of global GDP in 2022. The sharing of banking information has driven down the percent of untaxed offshore wealth, which dropped from roughly 10 percent of GDP before the changes to just over 3 percent now. Despite these improvements, the richest among us still pay little to nothing on their massive holdings.

The observatory is calling for a 2 percent global minimum wealth tax on billionaires. The group suggests this could raise nearly $250 billion — roughly equivalent to Portugal’s GDP — from fewer than three thousand contributors. The report adds that “A strengthened global minimum tax on multinational companies, free of loopholes, would raise an additional $250 billion per year.” It notes that the cumulative funds these two measures would raise is equivalent to what developing countries need to manage the effects of climate change — effects they’re disproportionately facing thanks to the actions, past and present, of wealthy states.

Not a Cure-All but Better Than a Slap in the Face

France is on board with the idea and is pushing Europe to join its support. Last spring, the Biden administration proposed a Billionaire Minimum Income Tax that would “ensure that the very wealthiest Americans pay a tax rate of at least 20 percent on their full income, including unrealized appreciation.” To drive home the point, the White House made sure everyone knew the point wasn’t to punish the ultrarich for their “success,” but rather to “make sure that the wealthiest Americans no longer pay a tax rate lower than teachers and firefighters.”

The ultrarich reacted to Biden’s proposal as you’d expect, decrying it, mocking it, and declaring it dead on arrival. To say the least, it’ll be an uphill fight for Biden to pass the measure and to protect it from an inevitable court challenge that could end up in front of the partisan, Republican-dominated Supreme Court.

Wealth taxes are not a panacea. They won’t dismantle the structure that produces billionaires and leaves workers struggling to feed themselves. They won’t fund a socialist utopia, or even build out a global standard for welfare states. Moreover, any international system that would extract a minimum tax from the ultrarich would have to be, indeed, quite robust. If the rich are good at anything, it’s hiding their wealth and minimizing their tax burden one way or another. The Panama Papers certainly confirmed as much, as if there were ever any doubt.

A 2 percent tax would be a pittance. Of course, in a remotely just world, this small number would be irrelevant because there would be no need of the tax in the first place. That’s because there would be no category of billionaire, no class of wealth-hoarder who enjoyed the capital and the power that shape affairs in their interests while the many struggle to make ends meet and to speak up and be heard in public life. But that work is part of a much longer-term project, while today, here and now, we enjoy an outside chance at a prosocial outcome.

Despite the limits of a global wealth tax, there are virtues that make the undertaking worthwhile. For one, extracting hundreds of billions of dollars means there’s more money for states to spend fighting climate change, funding social programs, building infrastructure, and so forth. More money for collective undertakings of social import is more money for good and necessary causes.

Tip of the Billionaire-Tax Spear

Instituting a billionaire wealth tax across borders will also build momentum for other undertakings that aim to redress financial and power imbalances domestically and internationally. The OECD’s Global Minimum Tax on multinationals, which sets a minimum 15 percent tax rate of corporate behemoths and on to which 140 countries have signed, is one example of how such momentum works. It is proof of concept that a cross-border billionaire tax is both welcome and feasible, tough as the fight for it may be.

Successfully implementing a billionaire tax would indicate a modest but notable power shift, an assertion that the many — and the states that are ostensibly meant to represent them — do indeed retain some control over the powerful few who exercise disproportionate influence over social, political, and economic affairs at home and around the world.

The work of rebalancing power and inducing the ultrarich to pay up is like the work of politics as conceived by the sociologist Max Weber — that is, the “strong and slow boring of hard boards,” which takes “both passion and perspective.” A minimum wealth tax on billionaires around the world would represent progress on boring a hard board, even if it wouldn’t put us through to the other side.