UN Tax Pillars to Address Capital Concentration (through Inheritance Levies) and Wealth Flight (through Exit Taxes) – Implications for the European Union

Abstract

The article investigates the rising concentration of capital ownership, drawing evidence from the United States, Germany and other European states, and its impact on widening wealth inequality. It warns of modern economies morphing into an “inheritocracy”, where corporate equity and financial assets concentrate across generations. The analysis sheds light on the limitations of income tax systems in addressing wealth inequality in the context of high capital mobility. To tackle these challenges and building on the OECD’s experience with a global minimum tax for large corporations, the article advocates for a UN-led multilateral approach supporting Global Minimum Inheritance Taxes and a Global Minimum Exit Tax to prevent a race to the bottom in taxing high-net-worth individuals and deter wealth flight. By coordinating these taxes at a supranational level, the article supports a fairer tax burden distribution and emphasizes the revenue potential of inheritance levies. Additionally, drawing from the US Expatriation Tax, it explores the legal feasibility of the European Union harmonizing an EU-wide exit tax to mitigate capital flight. Ultimately, these measures have the potential to enhance progressivity across tax systems.