Another $250B going toward the greater good every year? Sounds nice, but it ain’t happening

European economists dropped research this week backing the taxation of billionaires. It’ll be an uphill climb.

Every so often, this wild idea floats to the surface of the economic discourse: What if we got the planet’s richest people to pay just a wee bit of tax on their enormous piles of wealth?

taxation of billionaires
  • This message fueled the popularity of Bernie Sanders, who doesn’t believe billionaires should even be a thing.

That pesky idea is back again

This time, it’s the EU Tax Observatory, a network of independent European economists, banging that drum, per Bloomberg.

The organization’s research found billionaires carry effective tax rates of 0%-0.5% today.

  • At that rate, the world’s 2.75k billionaires contribute just ~$44B to government coffers every year.

The economists ran more numbers: What if that wealth got taxed at a 2% rate? (That’s way less than us idiots who don’t hide our money offshore or in holding companies, but still an improvement).

  • Their eyebrow-raising results: The increased taxation would yield an additional $214B per year.

Experts are now using those numbers to sound the alarm:

  • The EU Tax Observatory’s report also included recommendations for “tax justice” to improve the “social sustainability of globalization.”
  • Nobel Prize-winning economist Joseph Stiglitz joined their call for a global minimum tax on billionaires.

OK, but would this ever actually happen?

Eighty-one billionaires control 50%+ of the world’s wealth while 648m people live in extreme poverty, so imagining a world with $250B+ available annually for redistribution and reinvestment can be an enticing thought.

But don’t hold your breath.

As a reminder of how this stuff usually works, just look at 2021, when a landmark agreement between 136 countries set a 15% minimum tax rate for large multinational corporations.

What a win, right? Sure, except for all the loopholes that have chopped payments down to ~5%.

Bottom line: The rich always win, except maybe in Snowpiercer — which is fitting because building a functional, self-sustaining circumnavigational train feels about as likely as cajoling the uber-wealthy into paying a fair share.

New call-to-action

Related Articles

Get the 5-minute news brief keeping 2.5M+ innovators in the loop. Always free. 100% fresh. No bullsh*t.