Countries are changing their tax policies to target billionaires with the aim of reducing global inequalities. This trend is gaining momentum in many nations, including Italy, the UK, Brazil, Spain, and the Netherlands. At a recent G20 meeting in Brazil, the push to tax the wealthiest gained even further support. At the same time, this shift is expected to prompt many of the rich to relocate to countries that have more favourable tax conditions.
The global effort to increase taxes on the super-rich is gaining ground with even traditionally conservative governments now supporting the idea. In Italy, Giorgia Meloni’s government has doubled the ‘flat tax’ on foreign income from €100,000 to €200,000, signalling a shift away from policies that are designed to attract wealthy investors. This decision aligns with broader global discussions on taxing the wealthy more effectively. Italy’s economy minister, Giancarlo Giorgetti, stated that the country now opposes the practice of nations competing to provide ‘fiscal favours’ to wealthy individuals.
This trend is not just limited to Italy. A recent G20 finance ministers meeting underlined the need for higher taxes on the global elite, with leaders such as Brazil’s President Lula da Silva strongly advocating for this agenda. French economist, Gabriel Zucman, also supported the initiative, proposing a plan whereby billionaires would pay at least 2% of their wealth in taxes annually, potentially raising up to US$250 billion from just 3,000 of the world’s wealthiest individuals.
Despite concerns about driving the wealthy to low-tax countries like Singapore or the United Arab Emirates, organizations such as Oxfam are pushing for even broader tax reforms. It argues that taxing the rich and using the revenue to fund anti-poverty measures is crucial in the fight against global inequality. However, while the progress at the G20 is promising, many believe there is still much more to be done.
Ahead of the G20 meeting in Brazil, Oxfam released data revealing that the wealth of the top 1% has skyrocketed by US$42 trillion over the last decade. This is nearly 34 times more than the combined growth in wealth of the bottom 50% of the global population. On average, the net worth of the wealthiest individuals increased by nearly US$400,000 per person, after accounting for inflation, while the bottom half of the population saw an average increase of just US$335.
Christian Hallum, a senior tax policy advisor at Oxfam, talking about the initiative said:
“We are all incredibly excited about what happened at the G20 finance ministers meeting and the intention to tax the super-rich. But while 2% is better than nothing, it is at the low end of our ambitions. There needs to be a huge effort to tackle global poverty, and we need to cast the net wider.”
Countries like Norway and Spain have already implemented wealth taxes. In some cases, this has led to an exodus of wealthy individuals to countries with more favourable tax conditions, such as Switzerland. However, even in Switzerland, there are moves towards taxing the rich. In response to the climate crisis, Swiss youth have proposed a 50% inheritance tax on estates that are worth over 50 million Swiss francs, although the government is likely to oppose this in an upcoming referendum.
Parties in the UK also recently announced changes that will prevent non-domiciled individuals from permanently protecting foreign assets that are held in trusts from being liable for inheritance tax. Additionally, the Labour party has promised to close the profitable ‘carried interest’ loophole, which is commonly used by private equity partners, many of whom are also non-domiciled.
The shifts and changes in tax systems across various countries could eventually prompt many billionaires to relocate to places that offer a more favourable tax environment. Currently, the United Arab Emirates tops the list of preferred destinations for the wealthy worldwide.
Top 10 countries for projected net arrivals and departures in 2024 (‘000)
Source: The Financial Times
