International economists say that we need to tax extreme wealth quickly if we want democracy to win over "Caesarism."
Global efforts to stop multilateral tax cooperation are at the center of a plan to replace democratic government with government by force by the super-rich, which we could call "Caesarism" in the 21st century. The term comes from Oswald Spengler's 1918 book. The Decline of the West explained how concentrated financial power has historically taken over democratic institutions, turning elected governments into tools of oligarchic control. It's difficult to ignore the similarities after a hundred years. Spengler cautioned that in the terminal phases of democratic societies, "the forces of dictatorial finance" would methodically dismantle the regulatory state and pluralism, consolidating power within a limited elite that exists beyond the scope of democratic accountability. Today, around 35% of all foreign profits from multinational companies go through tax havens each year. The practice costs governments between $240 billion and $600 billion in lost revenue each year. This figure is according to studies cited in Foreign Affairs and backed up by the OECD. This agenda is weakening the structure of democratic self-governance from within. Any strategy to counter this agenda must acknowledge that taxing extreme wealth is not only a fiscal policy decision but a fundamental requirement for preserving democracy.
Signs of Progress: A Global Movement Is Taking Shape
There has been some meaningful progress, though it hasn't always been smooth. The African Union, which first pushed for a UN-led tax framework when Nigeria brought a historic resolution to the General Assembly on behalf of the African Group in December 2022, is still pushing for the United Nations Framework Convention on International Tax Cooperation (UNFCITC). This convention, which is currently being negotiated, is the most ambitious attempt in history to make the global tax system more democratic by moving power from the OECD, which has been controlled by rich countries for a long time, to the UN General Assembly, where every country has a vote.
Colombia, Brazil, Spain, and Tunisia have all made progressive changes to their tax systems that show what can be done. As Brazil's economy has gotten better under President Luiz Inácio Lula da Silva, the government has made changes to the tax system to make the rich pay more taxes. For example, the government has restored income tax on dividends and raised the tax rates on the highest earners. Spain, led by Prime Minister Pedro Sánchez, has seen some of the strongest growth in Europe. This is because the country has put in place a temporary solidarity tax on large fortunes over €3 million, a banking windfall tax, and higher taxes on energy companies. This shows that progressive taxation can work with, and maybe even help, strong economic performance. Colombia passed a big tax reform in 2022 that expanded the tax base, raised rates on high earners, and added taxes on processed foods and sugary drinks to pay for social spending. This gave the country one of the strongest fiscal positions in its modern history.
According to polls cited by Socialist lawmakers, about 75% of the French public supports the "Zucman Tax," which is a proposed 2% minimum tax on the total wealth of people with assets over €100 million. Economist Gabriel Zucman designed this tax. About 1,800 households would be affected by the tax, and it could bring in between €15 billion and €25 billion a year for the French government, though more conservative estimates put the number closer to €5 billion. In a country where the combined wealth of the 500 richest people has grown from 6% of GDP to about 40% over the past 30 years, from €200 billion to €1.2 trillion between 2010 and 2025, the need for tax justice has become a major political issue. In February 2025, the National Assembly passed a version of the Zucman tax with the help of left-wing parties and the far right's decision not to vote. However, the Senate, which is mostly made up of conservatives, turned it down in June. Seven Nobel Prize-winning economists, including Joseph Stiglitz, Paul Krugman, and Esther Duflo, wrote an open letter in July asking the French government to pass the tax. They said that it would effectively target all forms of tax avoidance and that individual countries should not wait for a global agreement but should lead by example. The proposed measure could bring in about €67 billion for EU member states as a whole. This number is even more important now that European governments are trying to find money for more defense spending and investments in the green transition.
In December 2025, Tunisia passed a new wealth tax as part of its 2026 finance bill. This tax will affect people who have global assets worth more than 3 million Tunisian dinars (about $1 million). There are two levels to the tax: 0.5 percent on domestic and foreign assets worth between 3 million and 5 million dinars, and 1 percent on assets worth more than 5 million dinars. Tunisia is one of the first countries in Africa and the Middle East and North Africa region to have a wealth tax that covers all assets, including digital currencies. The tax applies to real estate (except for primary residences), stocks, bonds, cryptocurrencies, and other movable property around the world. The country is heavily in debt, with a debt-to-GDP ratio of about 80 percent. It is trying to expand its tax base after cutting ties with the International Monetary Fund in early 2024 because it didn't want to accept a $1.9 billion loan package with strict austerity conditions.
The Service Employees International Union–United Healthcare Workers West (SEIU-UHW) is putting together a ballot initiative for the 2026 Billionaire Tax Act, which would let voters in California decide whether to impose a one-time 5% tax on the net worth of the state's estimated 255 billionaires. The tax, which would start on January 1, 2026, for residents, is expected to bring in about $100 billion over five years, or about $20 billion a year. Ninety percent of the money would go to healthcare, and the rest would go to education and food assistance. The plan doesn't count real estate, pensions, or retirement accounts as wealth, and it lets taxpayers spread payments over five years. Some wealthy Californians, including members of the Patriotic Millionaires group, support the measure. They say that a state where billionaire wealth has grown from $300 billion in 2011 to over $2 trillion in 2025 can afford a small one-time donation. The initiative still needs to get about 875,000 valid signatures to be on the ballot in November 2026, and it is facing legal challenges on several constitutional grounds. However, the fact that it exists shows that the political landscape around extreme wealth in the world's fifth-largest economy is changing.
The OECD/G20 Capitulation: How the Global Minimum Tax Was Cut Down
But the issue of tax fairness is still very hotly debated around the world. The OECD/G20 talks about the Inclusive Framework have ruined the ten-year effort to set a global minimum corporate tax of 15 percent, which 136 countries agreed to in principle in October 2021. This is because they gave in to American power.
The OECD said on January 5, 2026, that the more than 147 countries and jurisdictions in the Inclusive Framework had agreed to a new "side-by-side" arrangement. This arrangement effectively frees U.S.-based multinational companies from the two main backstop taxes of the Pillar Two framework: the Income Inclusion Rule (IIR) and the Undertaxed Profits Rule (UTPR). U.S. Treasury Secretary Scott Bessent hailed the agreement as a victory for American sovereignty, declaring that U.S.-headquartered companies would remain subject only to U.S. global minimum taxes. The arrangement sets up a new "side-by-side safe harbor" with rules that are designed to be exactly like the current U.S. tax system. This means that only the United States qualifies right now, but other countries may be able to apply in 2027 and 2028.
The way this surrender happened was interesting. G7 leaders worked out the terms of the carve-out with Washington in June 2025, when the United States threatened to retaliate by proposing a "Section 899" tax that would target countries that applied Pillar Two provisions to American companies. In July 2025, congressional Republicans took out the Section 899 part of the One Big Beautiful Bill Act (OBBBA). This bill also changed the name of the Global Intangible Low-Taxed Income (GILTI) regime to "Net CFC Tested Income" (NCTI) and set its effective rate at about 12.6 percent, which is still lower than the global minimum of 15 percent. In January 2026, members of the Inclusive Framework made the side-by-side deal under a lot of time pressure. This was because the transitional rules that protected U.S. multinationals from Pillar Two had run out at the end of 2025. Some EU member states didn't like the deal, but they knew that it would give American companies an edge over their own multinationals, which are still subject to the global minimum tax.
The main technical lie at the heart of the deal needs to be looked at very carefully. The Inclusive Framework effectively said that the current U.S. tax system is the same as the second pillar of the original agreement. This means that other countries can't tax U.S.-based multinationals more. But as famous economist Joseph Stiglitz has said many times, the two systems are very different in how they are built. Pillar Two's global minimum tax looks at a multinational's effective tax rate in each country where it does business. If the rate is less than 15 percent, the tax is added on. The U.S. system, on the other hand, applies to the total foreign profits of U.S.-based multinationals on a blended basis. This lets businesses make up for the high taxes they pay in some countries by using the low or no taxes they pay in others. This keeps the benefits of tax havens. A business that pays 25% in Germany and 0% in Bermuda can "blend" those rates and say that its overall foreign tax rate is good, even though it isn't paying anything in the tax haven. The FACT Coalition said in its analysis of the agreement that this means that U.S. companies can still use tax havens much more than they could if there were a real minimum tax that applied to each jurisdiction.
This new deal not only goes against the idea that multinational companies should pay a minimum coordinated tax rate no matter where they do business, but it also sets up a two-tier global tax system. In this system, U.S.-based multinationals have structural advantages over companies based in other countries, such as European manufacturers and Asian technology companies, that are still subject to the full Pillar Two regime. It's ironic that the country with the most aggressive profit-shifting strategies by its multinationals has been given an exemption from the rules meant to stop that behavior.
The Trump Administration's Attack on Neo-Mercantilism
The OECD's surrender cannot be understood on its own. It is part of the Trump administration's larger neo-mercantilist strategy, which is to attack the multilateral institutions and rules that have governed international economic relations since the end of World War II.
Trump signed an executive order on his first day back at work in January 2025 that pulled the US out of all obligations related to the Global Minimum Tax. During the organizational meeting for the UN Framework Convention talks in February 2025, the US delegation said that the goals of the convention were "inconsistent with US priorities," said they would not be participating any further, and left the room. The threat and imposition of economic blockades, the unilateral declaration of punitive tariffs, and the use of military assets as tools of commercial leverage are all part of a strategy to get resources and access to markets while stopping competitors, especially China, from doing the same.
This strategy is based on something deeper than just protecting trade. It is an effort to change the way the world economy works so that raw power, not negotiated rules, is the basis for the system. In this new system, the strongest actors set the rules on their own. In this case, the gutting of the global minimum tax is not just a technical failure of tax policy; it is a planned act of institutional destruction meant to keep the biggest and most profitable companies in history mostly out of reach of democratic taxation.
The Democratic Counter-Coalition
To comprehend the practical manifestation of a democratic alternative, one need only examine the economic trajectories of nations that have resisted this agenda. Brazil's economy has made a big comeback under Lula, thanks to more spending on social programs, higher real wages, and a renewed focus on industrial policy and regional development. Spain has had GDP growth rates that are consistently higher than the eurozone average since Sánchez took office, and it has also made progressive tax changes. Colombia's growth since Ocampo's tax reforms shows that emerging markets can have both fiscal progressivity and economic dynamism. These governments are not just fighting Trump's economic nationalism; they are also leading a global democratic anti-reactionary coalition. The success of this coalition shows that progressive fiscal policies and stronger state capacity are linked to better economic indicators and stronger social cohesion.
The difference between this and the austerity-driven policies that international lenders and right-leaning governments like is very clear. France's political crisis, which has seen four prime ministers come and go in fourteen months under President Macron, shows how politically unstable the other path is. Each one was brought down in part by opposition to austerity budgets that would cut social spending while leaving billionaires' fortunes untouched. Zucman said in interviews during the crisis that the fact that successive French governments have refused to seriously consider proposals to tax the ultra-rich has directly led to the political instability that has brought the country to a standstill.
The Last Best Hope of the UN Framework Convention
Even though the U.S. walked out, the rest of the world has decided to move forward with the United Nations Framework Convention on International Tax Cooperation. As of early 2026, there have been four negotiating sessions: one in New York in August 2025, one in Nairobi in November 2025, and one in New York again in February 2026. More sessions are planned through 2027, when the General Assembly will receive the final text of the Convention and two early protocols.
The process, chaired by Egyptian tax policy official Ramy Youssef, is organized around three workstreams: the framework convention itself, an early protocol on taxation of income derived from cross-border services (including digital services), and an early protocol on the prevention and resolution of tax disputes. More than 120 government delegations, as well as civil society groups and industry groups, have taken part in the negotiations. They have already come up with a draft convention text that deals with harmful tax practices, transparency, beneficial ownership, and information exchange.
The stakes are very high. The current international tax rules for multinationals were made in the 1920s based on the "arm's length principle," which says that subsidiaries of the same multinational corporation should be treated as separate businesses doing business at market prices. These rules are entirely wrong for today's digital economy. The arm's-length framework opens up many ways for companies to move profits around. For example, they can change transfer prices, send royalty payments through shell companies in tax havens, and set up intercompany debt to make fake deductions. This way, multinationals can make it look like their profits come from places with low or no taxes, no matter where the real economic activity takes place. According to research by economists Ludvig Wier and Gabriel Zucman, about 35% of multinational companies' profits, or about $420 billion, are moved to places like Ireland, Singapore, Bermuda, the Cayman Islands, and the Netherlands each year. The loss of revenue is terrible: between $240 billion and $600 billion a year, with developing countries losing the most compared to their public budgets.
It's about time we had a unified tax system. Instead of seeing a multinational corporation as a group of separate businesses doing business with each other, negotiators in New York are looking into a formulary apportionment model. This model divides the global consolidated income of multinationals among different jurisdictions based on verifiable economic factors like sales revenue and the number of employees. Stiglitz has stressed that this approach would be in line with the fact that a modern multinational is one big business that makes money across borders. This principle must be written into the UN tax treaty. If not, the current rules, which are very flawed, will become even more entrenched, and the goal of "compatibility" with existing OECD frameworks will put both the Convention's goals and its ambition at risk.
According to Zucman's research, there is an estimated $7.6 trillion in household financial wealth held in offshore tax havens. The negotiations also include new commitments for countries to tax the super-rich, better sharing of information between countries about who owns what assets, and new ways to tax cross-border digital services that have let tech giants make huge profits in countries where they pay little or no tax.
The Choice We Have
The central question of this moment is whether democratic institutions can reclaim their authority over the concentrated financial power that is swiftly transforming the global order or if the pattern articulated by Spengler a century ago will recur, resulting in democracy being gradually integrated into a governance system designed for the ultra-wealthy.
Evidence from France, Brazil, Spain, Colombia, Tunisia, California, and the UN negotiations in New York indicates that democratic resistance is not futile. The Zucman Tax has almost universal support in France, and there is a growing global coalition for the UN tax convention. Also, hundreds of millions of voters are willing to support progressive fiscal reform. All of these things point to a political group that is ready for significant changes. Seven people who have won the Nobel Prize have supported the idea. More than 120 countries are still negotiating, even though the US is getting in the way. In California, even some billionaires are in favor of a tax on their own class.
But the window is getting smaller. Every year that the current system stays in place, the government loses between $240 billion and $600 billion in potential revenue to the offshore system. Every concession to corporate lobbying, every "safe harbor," every side-by-side arrangement, and every exemption carved out under threat of retaliation, makes it even harder for people who already have the most to get ahead. And every time a democratic government fails to keep its promises to its people because it doesn't have the money to pay for healthcare, education, infrastructure, and climate action, it makes people less trusting of democracy itself. This is what Spengler predicted would happen.
If nothing changes, the system will keep failing, and another change will be pointless. We need to tax extreme wealth quickly if democracy is to win over Caesarism.