In a bid to address the issue of under-taxed billionaires, French economist Gabriel Zucman has proposed a starting point of a 2% levy on fortunes exceeding $1 billion. Zucman, founder of the independent EU Tax Observatory, presented a report commissioned by the Brazilian G20 presidency for discussion among finance ministers of the world's 20 largest economies.

The report, released on Tuesday, aims to initiate political discussions and encourage a global conversation on the subject rather than seek immediate implementation. Zucman expressed hope that such a tax could become a reality within nine years, drawing on the precedent of the global minimum tax on multinational corporate profits that took a similar timeframe to agree upon.

Support for the proposed tax has been shown by various countries and regions, including France, Spain, Colombia, Belgium, the African Union, and South Africa, which will assume the G20 presidency next year. However, Germany is skeptical about new components of a global tax agenda, according to Finance Minister Christian Lindner. Similarly, U.S. Treasury Secretary Janet Yellen stated that the United States cannot back a global wealth levy.

Zucman outlined different methods of implementation, including President Joe Biden's proposal for a billionaire minimum income tax in the U.S. This proposal targets individuals with more than $100 million in wealth and subjects their entire pre-tax return on wealth to a minimum individual tax rate of 25%. The economist emphasized that Biden's proposal is more ambitious than the 2% international standard as it equates to a minimum tax of 2.8% on wealth, based on observed rates of return.

Implementing the global tax rule could generate annual tax revenue of $200 billion to $250 billion from approximately 3,000 individuals, Zucman highlighted. Furthermore, extending the tax to those with over $100 million in wealth could yield an additional $100 billion to $140 billion. The report also revealed that from 1987 to 2024, the average wealth of the world's top 0.0001% richest households has grown by around 7% annually, outpacing the global average annual wealth growth rate of 3%.

Zucman pointed out that billionaires and their businesses have greatly benefited from globalization, raising concerns about whether current tax systems effectively distribute these gains or contribute to their concentration in the hands of a few individuals.

The release of this report marks a significant step towards addressing the taxation of billionaires' fortunes on a global scale, igniting a debate among finance ministers and setting the stage for future discussions and potential changes in wealth taxation policies worldwide.