Billionaires pay 0.3% tax rates while nurses pay 13% - but international coordination could finally fix this
How G20 coordination and modern technology could succeed where European wealth taxes failed
A nurse earning £35,000 pays more in tax than many billionaires do relative to their wealth. She faces income tax, national insurance, and countless indirect levies that consume a substantial portion of her economic capacity. Meanwhile, America's 400 richest families pay an average federal tax rate of just 8.2%, whilst billionaires globally pay the equivalent of 0.3% of their wealth according to G20-commissioned research.
This isn't a minor policy quirk—it's a complete inversion of how fair societies should work. When investment portfolios growing by millions annually face lower tax rates than wages earned through actual work, something has gone fundamentally wrong with democratic capitalism.
Dale Vince's call for a 2% wealth tax on fortunes above £10 million responds to this crisis. His moral case is unassailable: those who've benefited most from society's infrastructure should contribute proportionally to maintaining it. The harder question is whether such taxation can actually work.
History suggests reasons for pessimism. France's wealth tax drove 42,000 millionaires abroad, raising just €4.4 billion at its peak—barely 1% of total revenue before being abandoned in 2017. Norway's recent modest increase triggered a billionaire exodus that cost more in lost income taxes than the wealth tax generated. These experiences appear to validate critics who dismiss wealth taxes as economic vandalism.
But this narrative misses the crucial point: what killed European wealth taxes wasn't the concept itself, but the escape routes. When Norwegian billionaires fled to Switzerland, they didn't escape wealth taxation—they simply paid it to Swiss authorities instead. The fundamental flaw was attempting unilateral action in a globally integrated economy.
Today's proposals offer something radically different: coordinated international action that eliminates tax haven escapes whilst leveraging technological advances that make enforcement practical. The question isn't whether the old European model failed, but whether modern coordination can succeed where individual countries couldn't.
The inequality inversion
The scale of wealth concentration that has emerged since the 1980s defies historical precedent. America's top 0.1% now control 22% of total wealth compared to 7% in 1970. Simultaneously, tax rates on the wealthy have collapsed from 91% peaks in the 1950s to today's preferential rates on investment income.
This has created a grotesque inversion of tax burdens. Economists Emmanuel Saez and Gabriel Zucman demonstrate that America's tax system has become regressive at the top, with billionaires paying lower effective rates than teachers, firefighters, and nurses. The mechanisms are well-established: whilst wages face full income tax and payroll contributions, investment returns benefit from preferential capital gains rates, tax-free appreciation through unrealised gains, and sophisticated avoidance structures.
Consider what this means in practice. Jeff Bezos's formal salary was less than £80,000 whilst his wealth grew by billions. Under current rules, those billions face no taxation until sold—if ever. Meanwhile, the Amazon warehouse worker earning £25,000 pays income tax, national insurance, VAT on purchases, and council tax on housing. The person doing the physical work subsidises the person extracting wealth from their labour.
This represents more than unfairness—it undermines the meritocratic foundations that democratic societies depend upon. When 35-45% of wealth comes from inheritance rather than achievement, the idea that success reflects talent and effort becomes fictional. Wealthy inheritors maintain this fiction through elaborate mental gymnastics, downplaying their advantages by referencing distant family struggles or distinguishing their "deserving" inherited wealth from others' less legitimate fortunes.
Such cognitive contortions reflect a deeper crisis. Democratic capitalism depends on the belief that outcomes roughly reflect contribution and merit. When inherited wealth dominates economic results whilst working people bear disproportionate tax burdens, that belief becomes unsustainable. The rise of populist authoritarianism partly reflects this legitimacy crisis—people understand intuitively that the system is rigged, even if they can't articulate exactly how.
Why individual countries failed
European wealth tax failures offer essential lessons, but not the obvious ones. France's wealth tax didn't fail because taxing wealth is impossible—it failed because trying to do so alone created obvious arbitrage opportunities. Wealthy French citizens could relocate to neighbouring Belgium with minimal disruption to their business interests or lifestyle, maintaining full access to European markets whilst escaping French taxation entirely.
The practical challenges were equally predictable. Wealth taxes require annual valuations of assets that rarely trade—private companies, art collections, intellectual property rights. When individual countries attempted this with limited resources whilst facing armies of tax advisers, the administrative costs consumed massive proportions of revenue whilst generating endless disputes.
Norway's recent experience perfectly illustrates the coordination problem. The government's increase from 1% to 1.1%—hardly revolutionary—prompted wealthy entrepreneurs to restructure their entire lives. Fredrik Haga, whose cryptocurrency firm Dune was valued at over $1 billion, explained his move to Switzerland starkly: "I had to choose: am I based in Norway or do I want this company to succeed? It's not about not wanting to pay taxes. It's about paying taxes on money I don't have."
Yet this reveals the solution as clearly as the problem. When Norwegian billionaires flee, they don't escape wealth taxation—they pay it to Swiss cantonal authorities instead. Switzerland's wealth taxes work precisely because they coordinate across jurisdictions whilst offering limited external escape routes. The lesson isn't that wealth taxation is impossible, but that it requires coordination to prevent destructive competition between jurisdictions.
The technology revolution
Since European wealth taxes collapsed, technological advances have transformed international tax enforcement beyond recognition. The Common Reporting Standard, operational since 2017, enables automatic information sharing between over 100 countries. Banks worldwide must now report foreign account holders to their home tax authorities, making traditional offshore evasion far more difficult and expensive.
The impact is measurable and substantial. Academic research shows the CRS reduced deposits in tax havens by 11.5%, whilst cross-border tax evasion has declined dramatically across participating jurisdictions. The infrastructure now exists for tax authorities to track assets globally in ways that were pure fantasy when European wealth taxes operated.
Digital systems have similarly revolutionised asset valuation. Modern financial markets generate real-time data on most investment values, whilst sophisticated algorithms provide reliable estimates for complex assets. The valuation disputes that overwhelmed individual tax authorities in the 1980s become manageable when addressed through coordinated international systems with shared expertise and resources.
These advances matter because they eliminate the core mechanisms that undermined historical attempts. When asset hiding becomes difficult and expensive, and when coordination prevents jurisdiction shopping, the behavioural responses that killed previous wealth taxes become far less viable. The game has changed fundamentally.
The coordination breakthrough
The most powerful evidence for optimism about wealth taxation lies in successful precedents for international tax coordination. The 2021 agreement on 15% global minimum corporate tax rates demolished the argument that meaningful cooperation is impossible. Over 130 countries committed to this framework, creating enforcement mechanisms that prevent races to the bottom whilst generating substantial revenue.
Gabriel Zucman's G20 proposal builds directly on this corporate tax success. A coordinated 2% minimum tax on billionaire wealth would affect approximately 3,000 individuals globally whilst generating an estimated $250 billion annually—more than enough to fund massive public investments in health, education, and climate response.
Unlike the doomed unilateral attempts, this approach eliminates escape routes by ensuring wealth remains taxed regardless of location. Billionaires could relocate from New York to Geneva to Singapore, but they'd still face the minimum 2% levy. Countries that refuse participation would face mechanisms ensuring their residents don't escape taxation simply by moving.
The political momentum is building rapidly. France, Spain, South Africa, and Brazil have endorsed the approach, whilst the G20 has commissioned detailed implementation blueprints. The corporate tax precedent provides both technical frameworks and proof that international coordination works despite sovereignty concerns and competing national interests.
Crucially, success doesn't require universal participation. The corporate minimum tax proceeded despite some holdouts, and wealth tax coordination could similarly work with a critical mass of major economies. The coordination model creates strong incentives for broader participation over time.
Making it work
Modern wealth tax proposals incorporate every major lesson from historical failures whilst leveraging new capabilities for coordination and enforcement. The design principles address each challenge that undermined previous attempts:
High thresholds target only genuine ultra-high-net-worth individuals. Zucman's £10 million threshold affects fewer than 0.05% of the population—true multimillionaires and billionaires rather than successful professionals caught by European taxes with lower thresholds. These individuals can afford sophisticated compliance advice and pose genuine administrative challenges only at scale.
International coordination eliminates jurisdiction shopping by ensuring wealth faces taxation regardless of location. This addresses the fundamental flaw that created obvious escape routes to neighbouring countries with different tax regimes.
Enhanced enforcement leverages CRS information sharing, improved valuation methods, and coordinated audit resources. The administrative burden that overwhelmed individual countries becomes manageable when distributed across coordinated international systems with shared expertise.
Presumptive taxation methods reduce disputes whilst ensuring meaningful contributions regardless of how wealth is structured. Billionaires would pay either traditional income taxes or wealth tax minimums—whichever is higher. Those already paying 2% of wealth in income tax would face no additional burden.
Exit taxes and coordination mechanisms prevent free-riding by ensuring non-participating countries cannot simply attract fleeing wealth. The Norwegian model, requiring payment on unrealised gains when leaving, provides a template for preventing tax-motivated relocations.
These improvements don't eliminate all challenges, but they address the fundamental problems that made historical wealth taxes unworkable. The combination of coordination, technology, and proven enforcement creates conditions dramatically different from those facing European attempts.
The democratic stakes
This debate extends far beyond tax policy into the foundations of democratic legitimacy. When societies allow extreme wealth concentration whilst working people bear disproportionate burdens, democratic capitalism loses its moral authority. The rise of authoritarian populism reflects partly this crisis—people understand the system serves inherited privilege over merit and contribution.
Wealth taxation offers a practical response whilst generating resources for public investment in areas that matter to ordinary citizens: healthcare, education, infrastructure, and climate response. A global 2% minimum could fund universal childcare, green energy transitions, or comprehensive healthcare systems. The question isn't whether billionaires can afford such contributions—they demonstrably can whilst remaining extraordinarily wealthy.
The real question is whether democratic societies can afford not to implement such measures. When inequality reaches levels that threaten social cohesion and political stability, continuing with systems that tax work more than wealth becomes actively dangerous to democratic institutions.
Historical wealth tax failures shouldn't blind us to fundamentally changed circumstances. If the G20 can coordinate complex corporate tax policy affecting multinational firms across dozens of jurisdictions, coordinating taxation of 3,000 billionaires seems achievable by comparison. The technology exists, enforcement mechanisms are proven, and political momentum is building.
The choice isn't between perfect wealth taxation and the current system, but between imperfect attempts to address extreme inequality and acceptance of arrangements that increasingly resemble inherited aristocracy rather than democratic capitalism. When billionaires pay 0.3% whilst nurses pay 13%, basic tests of legitimacy and fairness have already failed.
International coordination offers realistic prospects for correcting this inversion whilst avoiding the capital flight that doomed unilateral attempts. The corporate tax precedent proves such coordination works; technology makes enforcement practical; and the moral case becomes more compelling daily as inequality reaches levels that threaten democratic governance itself. The only question remaining is whether democratic societies have the political will to act whilst they still can.