Close to 20 former heads of state and government of G20 and higher-income countries called on current G20 leaders to support a “new global deal to tax the world’s ultra-rich individuals” in an open letter published this week. Ensuring the ultra-rich pay their fair share “would reduce inequality and raise trillions of dollars necessary for investments in industrial policy and a just transition.”
The former leaders in the letter – including former President of Chile Michelle Bachelet, former Prime Minister of Sweden Stefan Löfven, former Prime Minister of Australia Julia Gilliard, former Prime Minister of France Dominique de Villepin and former President of Spain José Luis Rodríguez Zapatero – state that “Brazil’s G20 proposal underlines the opportunity to write a new story about taxation for the first time in a generation” at a time when “billionaires, globally, are paying a tax rate equivalent to less than 0.5 percent of their wealth.”
The Brazilian government, in its presidency of the G20, is championing a new global tax standard on taxing the ultra-rich. The letter by former heads of state and government of G20 countries comes alongside talks across G20 capitals to back the deal, and ahead of a meeting of G20 finance ministers and central bankers in Rio de Janeiro, Brazil, on 25 July. Governments including Brazil, South Africa, France and Spain have already voiced their support.
The leaders write: “rare is a proposal that asks us as former leaders to rally in unity —and that we recognize as politically possible. This, clearly, is one.”
Stefan Löfven, former Prime Minister of Sweden and Member of Club de Madrid, said:
“Brazil’s sensible proposal to set new global standards to tax the wealthiest individuals is a strategic economic game-changer that all G20 leaders must get behind. With leaders like President Biden championing bold new proposals, we’re witnessing a groundbreaking shift. But for these efforts to be truly effective governments need to cooperate internationally.
“The leaders of the world’s most powerful economies are uniquely placed to offer the stewardship that people are crying out for today. Backing Brazil’s credible G20 proposal could be one of the most important multilateral steps in recent history: it would not only raise billions of dollars for countries vital investments in people, but also offer the new global consensus the world needs for fairer taxation.”
Michelle Bachelet, former President of Chile and Vice-President of Club de Madrid, said:
“Brazil’s proposal for a global deal to tax the wealthiest people is the kind of responsible economic statecraft that governments need today. By getting behind this agenda, G20 leaders would show they’re taking on oligarchic levels of extreme inequality and the harm to democracy that it creates.
“We need a world in which the wealthiest are taxed in every country, and not allowed to dictate the rules for their own benefit. Brazil is showing us how. By backing President Lula’s G20 effort, leaders are giving multilateralism hope: proving that governments can cooperate to create fair rules for all.”
The former world leaders state that “global capital does not respect national borders,” noting that while national action is “indispensable”, it “alone can only go so far.” The former presidents and prime ministers write that “tax avoidance and evasion by the ultra-rich succeeds when governments fail to work together.”
Helen Clark, former Prime Minister of New Zealand and Member of Club de Madrid, said:
“Brazil is to be commended for bringing the issue of a global tax standard on the world’s billionaires to the G20 table. This builds on an earlier G20 decision to support a global minimum tax of fifteen per cent on multinational companies. The latter initiative took years to come to fruition. Both initiatives build global cooperation to tackle tax avoidance.”
The letter, which was coordinated by Club de Madrid and Oxfam, warns that “the share of income of the top 1 percent of earners has risen by 45 percent over four decades while top tax rates on their incomes were cut by roughly a third.”
Read the letter
Wednesday, 10 July 2024
Dear G20 Leaders,
We, the undersigned former Heads of State and Government of G20 and higher- income countries, write to ask for your leadership to back the Brazilian G20 presidency’s proposal for a new global deal to tax the world’s ultra-rich individuals.
We, as former leaders, recognize a rare strategic opportunity when we see one.
Taxes are the foundation of a civilized, industrious, and prosperous society. Yet our time is one in which the ultra-rich across the world pay a lower tax rate than teachers and cleaners. Billionaires, globally, are paying a tax rate equivalent to less than 0.5% of their wealth. Trillions of dollars that could have been productively invested in communities, education, health, and infrastructure have instead been unproductively accumulated by the ultra-wealthy.
Extreme inequality follows. In G20 countries, the share of income of the top 1% of earners has risen by 45% over four decades while top tax rates on their incomes were cut by roughly a third. That too many people feel the social contract is broken and their democracies have left them behind is all too understandable.
We know you know this. But our time is also one of promise, and Brazil’s G20 proposal underlines the opportunity to write a new story about taxation for the Qirst time in a generation.
We commend governments providing leadership and championing bold proposals to address inequality. Consider President Biden’s proposed billionaire income tax, that sets a global example. Across the world and political spectrum, taxing the ultra-rich enjoys consistent popular support, even among the ultra-rich themselves. The leadership of the G20 was vital to securing a global deal for a minimum tax on corporations. Now it’s time to do the same for the ultra-rich.
Every government must tax the ultra-rich. Every country can act. National action is indispensable. We need to tax billionaires’ income in every country.
But national action alone can only go so far. Global capital does not respect national borders. Tax avoidance and evasion by the ultra-rich succeeds when governments fail to work together. We need global cooperation.
That is why the proposal set out by President Lula and the Brazilian G20 presidency for a new global deal for taxing the world’s ultra-rich individuals is strategic and necessary.
Now is the time to foster cooperation for a shared standard so every billionaire on earth is paying a minimum level of their income in tax. We commend the governments of France, South Africa and other countries supporting this much- needed G20 proposal, and join the distinguished economists who champion it.
A new global deal to tax the ultra-rich is, crucially, in the service of strengthening national efforts to ensure the ultra-rich cannot evade domestic taxation efforts. It would reduce inequality and raise trillions of dollars necessary for investments in industrial policy and a just transition.
A global deal to tax the ultra-rich would be a shot in the arm for multilateralism: proving that governments can come together for the common good, especially at a time of fractured North-South solidarity in a decade that has seen a pandemic and war. It would build upon the G20 2021 minimum global corporate tax deal agreed to by 136 countries.
And a global deal would also help our economies to be more productive and resilient in the face of shocks. It must be designed in a manner that eases the tax burden on the working classes; that is ambitious enough to redress inequality; and that respects each country’s own policy choices for taxation.
We know, Qirst-hand, the reality of political ofQice and the constraints of leadership – including the pressures placed upon you. Rare is a proposal that asks us as former leaders to rally in unity – and that we recognize as politically possible. This, clearly, is one.
Dear G20 leaders – you lead the world’s most powerful economies and in this time of political and economic malaise, you can be the shepherds of progress and change. We ask that you offer the world leadership for a new consensus on taxation. We stand ready to support you on this agenda.
Sincerely yours,
Signatories*:
Carlos Alvarado – President of Costa Rica (2018-2022)
Michelle Bachelet – President of Chile (2006-2010; 2014-2018) and Vice- President of Club de Madrid
Jan Peter Balkenende – Prime Minister of the Netherlands (2002 – 2010)
Valdis Birkavs – Prime Minister of Latvia (1993-1994)
Kim Campbell – Prime Minister of Canada (1993)
Laura Chinchilla – President of Costa Rica (2010-2014)
Helen Clark – Prime Minister of New Zealand (1999-2008)
Julia Gillard – Prime Minister of Australia (2010-2013)
Felipe González – President of the Government of Spain (1982-1996)
Dalia Grybauskaitė – President of Lithuania (2009-2019)
Alfred Gusenbauer – Chancellor of Austria (2007-2008)
Han Seung-soo – Prime Minister of the Rep. of Korea (2008-2009) and Vice- President of Club de Madrid
Aleksander Kwaśniewski – President of Poland (1995-2005)
Yves Leterme – Prime Minister of Belgium (2008; 2009-2011)
Stefan Löfven – Prime Minister of Sweden (2014-2021)
George Papandreou – Prime Minister of Greece (2009-2011)
José Luis Rodríguez Zapatero – President of the Government of Spain (2004- 2011)
Danilo Türk – President of Slovenia (2007-2012) and President of Club de Madrid
Dominique de Villepin – Prime Minister of France (2005-2007)
* All signatories are full Members of Club de Madrid, the largest forum of democratic former Presidents and Prime Ministers.
Original source: Club de Madrid
Image credit: Melody Temple, Unsplash.com
