Policy

A 500-Billion-Dollar Decision for the World: The Revenue Impacts of Global Unitary Taxation

Report by the Tax Justice Network and Public Services International

Countries could collect around US$500 billion more in corporate tax each year – 24% more from multinationals, without raising rates – by taxing multinationals where they actually do business rather than where they declare their profits. The report models the design choices at stake in the UN Tax Convention; an interactive explorer lets you examine the country-level estimates under every scenario.

Unitary Taxation Explorer

Country-level estimates for all scenarios modelled in the report — pick a country, a formula, and the design choices, and see who gains what.

Open the explorer full-page →

About

With a UN Framework Convention on International Tax Cooperation in sight, the world faces a decision that could fundamentally reshape corporate taxation. This report, written with Alex Cobham for the Tax Justice Network and Public Services International (PSI), estimates what is at stake: moving from the 100-year-old “pay where you say” approach – under which multinationals are taxed where they declare their profits – to a “pay where you play” approach that taxes them where they actually employ workers, hold assets, and make and sell their goods and services. In technical terms: from the arm’s length principle to unitary taxation with formulary apportionment.

We find that countries altogether would collect around US$500 billion more in corporate tax each year – 24% more from multinational corporations – without raising tax rates. Almost every country gains. Beyond the headline number, the report examines the design choices that determine how the gains are shared: treating resource rights as prior to taxing rights (without which low-income countries gain 35% less), measuring sales at destination rather than origin (which raises low-income countries’ gains by more than 40%), the choice of apportionment formula, and the effect of cross-border loss consolidation. It also shows that the small number of likely losers – corporate tax havens and “headquarters-bias” countries – could preserve their current revenues simply by applying ordinary tax rates to the smaller profit base they would keep.

The methodology note documents the data and estimation approach in detail, and all code and non-confidential data are available in the replication package.

Billionaire Wealth Ticker: a counter of time for your presentation

A small interactive piece, meant to be used as a counter of time during a presentation: a live counter showing how much Lidl founder Dieter Schwarz's fortune has grown while you speak. A back-of-the-envelope illustration of how quickly extreme wealth compounds, untaxed, over the course of a talk.

Open it full-page → · Editable version

About

A small interactive piece, meant to be used as a counter of time during a presentation, illustrating how much extreme wealth grows over the course of a talk. It fits an exponential curve through recent Forbes net-worth estimates for Lidl founder Dieter Schwarz and then runs a live counter showing how much that fortune has grown since you opened the page. Leave it running while you speak: the longer the talk, the larger the gain. There is a pause/“speech time” mode, a pop-out window, and an editable version where you can drop in your own figures.

It is meant as an illustration, not a measurement: real fortunes do not grow at a perfectly constant rate, and unrealised gains like these are largely untaxed in Germany. That is rather the point.

EU-Wide Unitary Taxation: A Path to a Fair Corporate Tax System

Presented at IIPF 2024

EU-wide unitary taxation would raise US$24.1 to 26.8 billion in isolation, more when combined with a minimum corporate tax.

Paper (SSRN)

Abstract

This paper examines the most direct method to curb European profit shifting: an EU-wide adoption of unitary taxation. Using country-by-country reporting data, we estimate country-level revenue changes when taxable profits are distributed based on different formulas measuring economic activity. We find that tax revenues would increase for most EU members. While some countries, in particular the Netherlands, Luxembourg, Ireland, and Malta, may incur losses, these can be offset by adopting an effective national top-up tax, consistent with the EU’s plan to introduce a minimum corporate tax of 15%. Our findings indicate that unitary taxation would not only restore fair competition and significantly boost EU-wide tax revenues (ranging from US$24.1 to US$26.8 billion in isolation or US$34.5 to US$35.4 billion when combined with the minimum tax), but is also politically feasible: when coupled with the minimum corporate tax, no member state would lose from its implementation.

Taxing Extreme Wealth: What Countries Around the World Could Gain from Progressive Wealth Taxes

Presented at Paris School of Economics

Using data from the World Inequality Database, we estimate the revenue potential of a moderate, progressive net wealth tax for 173 countries, calibrated on Spain's "solidarity surcharge." We find that such a tax could raise approximately US$1.9 trillion globally: on average, a 6.1% increase in government budgets.

Paper (PDF)

Abstract

In light of the global challenges of climate change, the cost of living crisis, high debt levels, and the risk of authoritarian rule, countries need stable and reliable revenue sources that do not harm their economies and societies. A moderate, progressive tax on net wealth is a tool to generate this revenue. Taxing extreme wealth not only addresses the problem of the regressivity of the income tax system for the ultra-rich but also reduces overlapping inequalities and ensures that those who have contributed the most to the planet’s destruction pay their fair share. This paper presents country-level estimates for 173 countries on the revenue potential from implementing a moderate, progressive tax on net wealth. We draw on the example of Spain’s “solidarity surcharge,” a model that has proven politically feasible, and use data from the World Inequality Database to project the revenues of adopting similar tax measures around the world. Our analysis indicates that such a tax could lead to an average budget increase of 6.1%. This equates to a potential global revenue of approximately US$1.9 trillion, which is over four times the investment required for countries to collectively adapt to climate change.