Do other countries have a billionaire tax? which ones?
Many governments have renewed a commitment to taxing wealth at higher levels to decrease tax avoidance. Which countries tax wealth at the highest levels?
After the release of the Pandora Papers, a collaborative and investigative journalistic project that revealed how some of the world’s super-rich hide their wealth from public authorities in their home countries. Those named in the papers include world leaders, celebrities, business owners, and more.
In response, many countries and international bodies have doubled down on their commitments to close tax loopholes and identify and prosecute cases of tax evasion.
Currently, no countries have a billionaire tax, specifically, but some do tax wealth at higher rates.
Spain applies a progressive wealth tax to assets valued over €700,000 ($812,315) after €300,000 ($348,135) primary residence allowance. The rate ranges between 0.2 to 3.75 percent.
The threshold in Norway is much lower. For individuals with assets valued at more than $170,000, a 0.85 percent tax is levied. While this is not progressive, it does allow the government to control the growth in wealth before it reaches higher levels.
Taxing wealth and income
Most governments have developed ways to tax both wealth and income.
The majority of workers in the United States pay income tax based on their labor. Then each year, they file a tax return with the Internal Revanue Service so the government receives what it mandates and the worker is returned any funds they are entitled to.
However, governments also tax wealth which can be held through an inheritance, the selling of stocks and trades, interest from savings accounts, and more. In most cases, the wealthiest people in the world do not derive their incomes from a salary resulting from their labor, much of is held in trusts, the stock market, or in off-shore bank accounts hidden from tax authorities.
Jeff Bezos, the world’s richest person has a net worth of around $211 billion but in 2018 when serving as the CEO of Amazon he made a little over $80,000.
Based on his income he sits firmly in the middle class. Bezos owns around ten percent of Amazon’s total stock which is where the majority of his wealth is held. This means that his total net worth is an estimate, and is not held in liquid currency. With such a low income, relative to his net worth, he is able to avoid paying higher taxes. ProPublica, an investigative news organization, found that between 2006 and 2018, “Bezos’ wealth increased by $127 billion, according to Forbes, but he reported a total of $6.5 billion in income.” During this period he paid, $1.4 billion in federal taxes, much more than any citizen ever will, “yet it amounts to a 1.1% true tax rate on the rise in his fortune.”
Taxing wealth is more challenging than income because the wealthy, as shown through the Pandora Papers the rich have many tools to hide their wealth from authorities. Additionally, decades of lobbying have allowed wealthy individuals to encourage Congress to draft a tax code that is extremely favorable to them. In September, IRS Commissionaire Charles Rettig reported that the US loses around a trillion dollars in revenue to tax avoidance each year.