G20 Finance Leaders Pledge Cooperation On Taxing Ultra-Rich

In a landmark move, G20 finance leaders issued their first-ever joint declaration on Friday, vowing to cooperate on effectively taxing the world’s largest fortunes. Finance ministers and central bankers from the Group of 20 major economies agreed to include references to fair taxation of “ultra-high-net-worth individuals” in both their joint communique and a separate declaration on international tax cooperation. “We will seek to engage cooperatively to ensure that ultra-high-net-worth individuals are effectively taxed,” stated the final draft of the G20 ministerial declaration in Rio de Janeiro, as seen by Reuters.

Debate Over the Right Forum

Despite this historic commitment, significant disagreements emerged regarding the appropriate forum for advancing the agenda. US Treasury Secretary Janet Yellen expressed a preference for the Organization for Economic Cooperation and Development (OECD) to handle such talks, citing its consensus-based approach and technical expertise. “We don’t want to see this shifted to the UN,” Yellen told Reuters, arguing that the OECD has made substantial progress on global tax negotiations over the past three years.

However, major developing nations and advocates for a global minimum tax on billionaires, including Nobel laureate Joseph Stiglitz, have pushed for discussions to be held at the United Nations. Susana Ruiz, Oxfam International’s Tax Policy Lead, emphasized the need for a “truly democratic process” for setting global tax standards, criticizing the OECD as a “club of mostly rich countries.”

Brazil’s Balancing Act

Brazil, holding the G20 presidency, finds itself at the center of this debate. Brazilian Finance Ministry official Guilherme Mello acknowledged the UN Framework Convention on International Tax Cooperation as a victory for developing nations seeking better representation. While recognizing both the OECD and the UN as legitimate forums, Mello emphasized the importance of ongoing discussions on how to effectively tax the super-rich.

Despite the ambitious goals, skepticism remains about the feasibility of implementing a global “billionaire tax.” European officials noted the difficulty of achieving consensus even within the 27-nation European Union. Although France has supported a global minimum wealth tax, Germany has shown resistance. “It seems that it might be very difficult to bring this forward,” remarked one European official at the G20 meetings.