At the G20, a billionaire tax is being proposed. But is it feasible?

Transcript

SCOTT DETROW, HOST:

Over the past decade, calls to tax the rich have grown louder around the world, but the needle hasn't exactly moved. Billionaires are still amassing huge amounts of money each year, and they are paying less in taxes than they have in decades. Enter the Brazilian government with this new proposal - a 2% global wealth tax on the uber rich, a tax that would impact the 3,000 wealthiest people around the globe. The G20 is currently kicking around the idea. The person who created the blueprint for that proposal is Gabriel Zucman. He's an economist at the Paris School of Economics and the University of California at Berkeley. I asked him to explain why 2% and how this tax on the super-rich would actually work.

GABRIEL ZUCMAN: Well, the starting point is that there is overwhelming evidence that the super-rich think billionaires have very low effective tax rates today. They pay much less tax than middle-class people in the U.S. and throughout the world. And the reason for that is because when you're very rich, it's easy to structure your wealth such that this wealth will not generate a lot of taxable income. So we've seen that, for instance, a few years ago, with the revelations by ProPublica in the U.S. on the tax payments of Jeff Bezos or Elon Musk and so on. And in some years, you see some of the wealthiest people in the world reporting almost no taxable income and paying very little, almost no individual income tax.

DETROW: And why, to you, is that a problem? Is it a matter of fairness? Are there economic reasons behind why you want to change that?

ZUCMAN: So first, there is a big loss of tax revenue for governments. That's money that we could spend on education, on health, on infrastructure and that we can't because they don't pay tax. And the other problem is - of course, is a basic fairness issue. It's difficult to understand why the very individuals with the highest ability to pay taxes should be allowed to pay less than ordinary people. And in fact, when you look at opinion polls all over the world, you see that 70%, 80% of voters everywhere think that the super-rich don't pay enough in tax and that they should be asked to contribute more. And so the idea is to have countries agree on a principle, a common norm that they would each of them implement domestically in various ways.

DETROW: There was a lot of interest in this idea at the recent G20 meeting, which is the main reason why we're talking about it, but you had some key countries expressing skepticism, including the United States. Treasury Secretary Janet Yellen said this is not an idea she's on board with. I believe Germany expressed opposition as well. If you have two key countries like that of the global economy with hesitation, what's the path forward?

ZUCMAN: So first of all, you have lots of countries that have expressed support. That very much includes Brazil, which is hosting the G20 this year, but also countries like France, like South Africa. In just a few weeks, you've had many countries coming on board. Second, in the U.S., at least the current administration supports such measures domestically, but it's true that it has been reluctant in pushing that agenda so far at the international level. And I think it's important to do this collectively because if we don't do this collectively, there is a risk of a race to the bottom, of some countries just choosing not to tax billionaires to try to attract them. And the most powerful way to prevent that is through international coordination.

DETROW: How long do you think the runway is to get something like a global agreement on taxing billionaires implemented in the way you're talking about?

ZUCMAN: It's going to take some time. Look, the discussions have started five months ago. In February, Brazil put that issue on the agenda of the G20. It had never been discussed before. The G20 has existed since 1999, and never before had they talked about inequality, extreme wealth, taxing the super-rich, you know, some of the most pressing issues of our time. And already in five months, we've made a lot of progress. That being said, nobody expects that this will become a reality in just a few months. It's going to take a few years.

DETROW: There's been a lot of electoral upheaval in a lot of the key G20 countries, you know, elections all around the globe this year, including here in the United States. Any worry that big leadership changes in countries like the U.S. or others could slow down some of that momentum, given this timeline you're talking about?

ZUCMAN: I mean, leadership might change, but what does not change is the overwhelming popular demand everywhere for this type of policy, for fixing this big tax injustice of our time which allows the super-rich to pay less in tax than their secretaries. And so that's what fundamentally makes me optimistic that at some point, and I hope it will be sooner rather than later, we'll reach a common agreement on that.

DETROW: That's Gabriel Zucman, an economist at the Paris School of Economics and the University of California, Berkeley. Thank you.

ZUCMAN: Thank you so much.

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