A recently published study by an advocacy group found that modest taxes on high incomes could generate hundreds of millions of dollars in much-needed revenue for countries in the Caucasus and Central Asia. This additional revenue could go a long way toward addressing the social and economic challenges associated with global warming and climate change, the study added.
The working paper, titled “Taxing the Ultra-Wealthy: How Countries Around the World Could Benefit from a Progressive Wealth Tax,” argues that a relatively small tax on the top 0.5% of income earners around the world could raise a total of more than $2 trillion. Published by the UK-based Tax Justice Network (TJN), the paper uses the example of Spain's wealth tax as the basis for an international model for taxing the ultra-rich.
“Global challenges, particularly the climate crisis, inequality and cost of living crises, entail significant financial demands,” the report states. “A modest, progressive wealth tax could help countries raise urgently needed funds. The proposed tax would require a reasonable contribution from each country's top 0.5% of the wealthiest individuals, who on average own more than 25% of society's total wealth.”
Under the TJN plan, the ultra-rich in each country would pay a tax on their assets above a pre-determined threshold, calculated on a sliding scale ranging from 1.7% to 3.5%. The plan sets the net worth threshold high so that the middle class is not penalized with the tax.
Wealthy countries in the Caucasus and Central Asia could receive hundreds of millions of dollars in additional revenue, according to the working paper's estimates. In Kazakhstan, the richest of the two regions, more than 61,000 citizens would be eligible to pay the wealth tax. The minimum assets required for people to be taxed in Kazakhstan would be $819,381. TJN estimates that, after adjusting existing taxes and other factors, the proposed wealth tax could bring in $3.7 billion in additional revenue for the Kazakh government. These funds were supposed to help speed the recovery of areas of Kazakhstan that were devastated by floods this spring. Residents of at least one hard-hit region protested in May, accusing the government of insufficient assistance.
Meanwhile, the TJN plan could bring in about $695 million in additional revenues for the Uzbek government, which has recently run a huge deficit as it tries to revive its economy. Under the TJN scheme, Azerbaijan, the richest country in the Caucasus, could add more than $241 million to its treasury. Tajikistan, the poorest country in both regions, could earn about $54 million.
The working paper argues that the ultra-rich should feel a moral obligation to mitigate the effects of global warming: “The wealthiest citizens bear a greater responsibility for carbon emissions due to both their excessive consumption and investment habits,” the report states.
The TJN does not outline an action plan for ensuring international adoption of the ultra-rich tax proposal. For the proposal to work, the report acknowledges that strict international transparency rules would need to be put in place, and urges the creation of a global wealth registry. It seems highly unlikely that such a mechanism will come to fruition in the near future.
“The existing tax system provides opportunities for international tax abuse for the ultra-rich, primarily through the use of secret jurisdictions to hide their wealth,” the report states. “The introduction of a moderate, progressive wealth tax must therefore be accompanied by a move towards full transparency of the beneficial ownership of all types of companies and assets.”
From Eurasianet.org
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