Wealth tax on richest 0.5% could generate $2.1 tn globally – Report

Campaigners from the Tax Justice Network have highlighted that adopting a wealth tax similar to Spain’s could potentially raise over $2 trillion (£1.5 trillion) globally.

The report suggests that implementing a modest tax on the world’s wealthiest 0.5% of households could generate substantial funds annually, which could be used to support climate transition efforts.

Spain, under the leadership of socialist Prime Minister Pedro Sánchez, introduced a temporary “solidarity” wealth tax in late 2022.

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This tax, collected during 2023 and 2024, targets individuals with net wealth exceeding €3 million (£2.6 million), affecting the richest 0.5% of households.

According to the Tax Justice Network’s report, applying a similar tax globally at a rate between 1.7% and 3.5% could raise approximately $2.1 trillion.

The study notes that certain exemptions in Spain’s tax, such as for shares in listed companies, intellectual property, industrial property, and high-value assets like boats and aircraft, were not included in the global estimate.

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In the UK, the report estimates that such a tax could generate $31 billion annually. This report comes as the G20 considers a global minimum tax on the world’s 3,000 billionaires under Brazil’s leftwing President Luiz Inácio Lula da Silva.

Countries like France, Germany, Spain, and South Africa have also expressed support for similar measures. However, achieving a consensus on such a global tax framework is anticipated to be a lengthy process and may face resistance from various nations.

Alison Schultz, a research fellow at the Tax Justice Network, commented: “A minority of rich countries still seem to be holding back from support for a robust framework convention on tax – despite this being the best opportunity that we’ve ever had, and one that their own people demand they act on with urgency. This needs to change now – the climate can’t wait, and nor can the people of the world.”

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Despite concerns that the ultra-wealthy might relocate in response to wealth taxes, the Tax Justice Network reports that previous tax reforms have not led to significant movements among the wealthiest individuals. For instance, following wealth tax reforms in Norway, Sweden, and Denmark, only 0.01% of the richest households relocated.

Similarly, a UK study estimated that changes to non-dom rules in 2017 resulted in a migration rate of just 0.02%.

In the UK, although Rachel Reeves has previously ruled out the introduction of a new wealth tax, the Chancellor is set to abolish non-dom status, aiming to raise over £5 billion.

Additionally, Reeves is considering increasing taxes on capital gains, inheritances, and pensions for the upcoming budget on 30 October.

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The Tax Justice Network report further reveals economic issues from wealth disparity. The richest 0.5% hold 25.7% of global wealth, while the bottom 50% hold just 3%. This imbalance leads to lower productivity, higher household debt, and worse societal outcomes.

The report criticizes the tax system where collected wealth (dividends, capital gains) is taxed less than earned wealth (salaries). Collected wealth grows faster, with only half of global wealth creation going to wage earners. Many billionaires, such as Elon Musk and Mark Zuckerberg, take $1 salaries but gain through ownership compensation.

Billionaires pay half the tax rate of the general population, and their wealth grows twice as fast. The wealth of the top 0.0001% has quadrupled since 1987, impacting economies and societies.