G20 finance ministers agree to work toward effectively taxing the super-rich

Finance ministers from leading rich and developing nations have agreed to strive toward effectively taxing the super-rich

Finance ministers from leading rich and developing nations agreed Friday to strive toward effectively taxing the super-rich, a joint ministerial declaration said.

“With full respect to tax sovereignty, we will seek to engage cooperatively to ensure that ultra-high-net-worth individuals are effectively taxed,” the declaration said after the two-day meeting in Rio de Janeiro.

Brazil has made a proposal to impose a 2% minimum tax on billionaires a top priority of its presidency of the Group of 20, ahead of the Nov. 18-19 summit in Rio.

While the final declaration stops short of agreeing on a specific global tax, Brazilian Finance Minister Fernando Haddad nevertheless called it a “significant step forward.”

“We were always optimistic about this result, but it really exceeded our initial expectations,” Haddad told reporters.

Brazil's proposal to tax billionaires has divided G20 nations. France, Spain and South Africa have expressed support, while the U.S. is against.

“Tax policy is very difficult to coordinate globally, and we don’t see a need or really think it’s desirable to try to negotiate a global agreement on that,” U.S. Treasury Secretary Janet Yellen told journalists Thursday.

Billionaires currently pay the equivalent of 0.3% of their wealth in taxes, according to a report by Gabriel Zucman, commissioned by Brazil. A 2% tax would raise $200 billion to $250 billion per year globally from about 3,000 individuals, money that could fund public services such as education and health care as well as the fight against climate change, the report said.

Brazil has put inequality, poverty and hunger at the heart of its presidency of the G20. President Luiz Inácio Lula da Silva defended the need for increased taxation of the world’s richest in Rio on Wednesday when he unveiled plans for a global alliance against hunger and poverty.

Brazil is also pushing for changes in global governance institutions and advocating for a sustainable energy transition.