[News Terms] Despite US Opposition... Rapid Progress in 'Global Wealth Tax' Discussions

The global wealth tax proposed by the Group of Twenty (G20) is a tax levied proportionally or progressively on individuals holding assets above a certain amount, aiming to apply it universally to high-net-worth individuals worldwide. This measure is intended to prevent wealthy individuals from paying less tax by using tax havens. Similar to how 140 countries agreed in 2021 to apply a global minimum corporate tax rate of 15% to multinational corporations, the proposal suggests collecting at least 2% of the assets annually from billionaires worldwide as a wealth tax.

The G20's effort to expand wealth taxes, which are currently implemented in some countries, into a global tax is due to the problem of capital flight, where assets are moved overseas to avoid taxes. Sweden, which was the first country in the world to introduce a wealth tax in 1911, abolished it in 2008 because the negative side effects of "tax exile" were more severe than the income redistribution benefits brought by the wealth tax. For example, Ingvar Kamprad, the founder of the global furniture company IKEA, stirred controversy by establishing a foundation overseas to avoid the wealth tax. France and Germany also abolished their wealth taxes for similar reasons.

Discussions on the global wealth tax are currently underway after Brazil, the chair country, put the issue on the agenda at the G20 Finance Ministers' meeting earlier this year. The G20 estimates that imposing just a 2% wealth tax on the world's 3,000 billionaires could raise an additional $25 billion in tax revenue. This amount is comparable to the economic losses caused by last year's climate crisis. G20 countries plan to revisit this agenda at working-level meetings scheduled for June.

The variable factor is opposition from the United States. U.S. Treasury Secretary Janet Yellen stated, "While I believe in progressive taxation, I cannot support or sign an international agreement that imposes taxes on billionaires and redistributes them in any way."