The case of Argentina

Abstract

Less inequality is necessary for sustainable development andstable democracies. States play an important role in reducinginequality. They do so through pro-poor spending andregulation, but also through taxes. On the other hand, sometaxes and even entire tax regimes do not actually reduce inequality.Tax privileges for the super-rich make many tax regimesless progressive then they could and should be. Butbecause they are difficult to capture in standard tax dataand tax regime analysis, they are often overlooked. To adequatelyaddress taxation of the super-rich additional researchinto these tax privileges is necessary. Following thecore narrative of the Global Tax Evasion Report 2024 andbased on experience from Germany, Christoph Trautvetterfrom the German Tax Justice Network proposes an easy-todoand easy-to-communicate advocacy tool to fill this gap(Trautvetter 2024).His suggestion is to use a typical super-rich individual and areal-world billionaire to illustrate the gaps and loopholes inthe tax regime. Using a billionaire owning easy-to-trace assetssuch as shares in a listed company that publishes detailedinformation on its profits and taxation turned out tobe the most convenient way to go about this. Constructinga portfolio of a typical super-rich and describing its taxationproved more challenging but not less interesting. For Germanythe analysis shows that both the billionaire and thetypical super-rich only pay about half of the top income taxrate and about half of the tax and contributions of an averageemployee and have managed to reduce their tax rate bymore than half in the last thirty years.In Argentina tax rates for the typical super-rich are muchhigher than for the average employee at least in theory, buta list of exemptions puts this in question in actual practice.In contrast, in Brazil tax-free dividends and a simplified calculationof corporate profits already create a huge differencein nominal tax rates in favour of the super-rich.A comprehensive two per cent wealth tax would increasethe tax rate of both the Brazilian and the German billionaireto approximately 50 per cent of their income, bringing itclose to the rate of taxes and social security paid on averagewages in these countries.