Tax on Ultra Rich To Aid Poor Countries

July 6, 2012 International Tax Cooperation

Taxes to aid developmentNEW YORK – Billions could be raised to help fund development work in the world’s poor and developing nations if a small new tax was imposed on the wealth of the world’s ultra-rich individuals.

On July 5th the United Nations (UN) released the 2012 edition of its annual World Economic Social Survey, which analyses current issues around development aid and puts forward new ideas and means of ensuring long-term and sustainable funding for poor and developing countries.

The UN proposed that part of the burden of raising funds for developing nations should lie with the world’s richest people, pointing to the 1 226 individuals who are estimated to have a net worth of at least USD 1 billion each.

According to the report more than USD 46 billion could be raised in the 2012 year alone if a new one percent tax was implemented on large “individual wealth holdings”. The UN suggests that the tax would not have a major effect on the world’s wealthiest individuals, saying that “… the ‘average’ billionaire would [still] own USD 3.7 billion after paying the tax”.

The UN has no power to implement the tax, but is calling on the international community to voluntarily impose the charge on its taxpayers. Commenting on the feasibility of imposing the tax around the world, the UN Secretary General Ban Ki-moon said that “strong international agreement is needed, with adequate governance mechanisms” in order to see this new form of “innovative financing” become a reality.

It is currently estimated that the net worth of the world’s billionaires is approximately USD 4.6 trillion. Currently, 425 of the billionaires reside in the USA, another 315 are in the Asia-Pacific region, 310 are in Europe, 90 are in South America, and 86 are located in Africa and the Middle East.

Photo by Wen-Yan King