Economist Gabriel Zucman is calling on Latin American nations to implement a 2% minimum effective wealth tax for individuals with assets exceeding $100 million. Zucman, who directs the International Tax Observatory, argues that regional tax systems currently favor the ultra-wealthy while placing a disproportionate burden on lower-income earners.
Zucman points to the G20 agenda, where Brazil recently pushed for global taxation standards for billionaires. He notes that the proposal has gained traction in Europe, with nations like France, Spain, and the Netherlands currently debating similar measures.
The case for a wealth floor
According to Zucman, the tax would function as a “floor” rather than a traditional levy. If an individual’s existing income and property tax payments fall below 2% of their total wealth, they would pay the difference. If their current taxes exceed that threshold, no additional payment is required.
"This ensures that billionaires contribute at least as much as common citizens," Zucman writes. He suggests this mechanism circumvents the common practice where the ultra-wealthy use complex structures to minimize their taxable income.
Data from the International Tax Observatory highlights the scale of wealth concentration in the region. In Latin America, the wealthiest 10% of the population controls approximately 50% of total income. Meanwhile, the poorest half of the population holds only 8% of income, yet pays nearly a third of their earnings in taxes, primarily through consumption levies.
In Chile, the impact of such a policy could be substantial. Zucman estimates that a 2% tax on fortunes exceeding $100 million would generate roughly $3 billion annually—the equivalent of 1% of the country’s GDP. He argues these funds could specifically bolster public health and education services.
Chile currently faces significant challenges regarding tax legitimacy. OECD data shows that only 18% of Chileans believe the national tax system is fair. With a tax-to-GDP ratio of 20.6%, Chile remains well below the OECD average of 34.1%.
Zucman rejects the notion that Latin American countries must wait for global consensus to act. While international cooperation remains a goal, he maintains that domestic policy shifts are both feasible and necessary. He contends that the increasing transparency of offshore assets has made the implementation of such a tax more practical than in previous decades.
