The US will not support a global tax on billionaires

A proposal that some members of the group of G20 advanced economies That would impose a global tax on the assets of the ultra-rich is not supported by the Biden administration, US Treasury Secretary Janet Yellen said on Monday.

Yellen told the Wall Street Journal that the United States is in favor of progressive taxes, according to which the rich pay a greater part of their income than those with fewer resources. However, he said, the “notion of some common global agreement to tax billionaires with redistributed profits in some way, we don’t support a process to try to achieve that. That’s something we can’t sign on to.”

The plan will have little chance of being implemented without US support, although it appears to have the backing of the leaders of some large economies such as France and Brazil.

The United States’ position on a global tax on billionaires contrasts with its support for a global minimum tax on international businesses, for which Yellen helped negotiate a deal early in President Joe Biden’s term.

A 2% tax would raise $250 billion

The objective of a global tax on billionaire wealth would be to prevent the ultra-rich from evading taxes by moving their money across borders or to tax havens that the tax authorities of their home country cannot reach.

Taxing wealth rather than income, which is typically where taxes are focused, would prevent billionaires from exploiting investment strategies that allow them to grow their wealth while generating little taxable income.

Speaking at the G20 finance ministers’ meeting in February, economist Gabriel Zucman, director of the EU Fiscal Observatory, cited evidence showing that the current global taxation of billionaires is regressive, meaning the effective tax rate they pay is lower, sometimes much lower, than the rates paid by average taxpayers.

“While there is much that countries can do individually, the best way to address this regressivity is by creating a common minimum standard through international coordination,” Zucman said.

“This is because the main obstacle to taxing the very rich in practice is the risk of them moving to low-tax locations. This international competition has put considerable pressure on the design of tax systems globally. But with international coordination, a binding floor can be put on the tax rates of the ultra-rich.”

Zucman’s organization has estimated that a 2% annual tax on the wealth of approximately 3,000 billionaires around the world would generate $250 billion in revenue each year.

“Moral debt”

Addressing a G20 meeting in Washington last month, MIT professor and Nobel Prize-winning economist Esther Duflo spoke in favor of the 2% tax, as well as a global tax on international companies, arguing that Revenues should be directed to helping poor nations in their struggle to adapt to climate change.

“The rich and rich corporations make their income from selling their products everywhere in the world, even in poor countries,” Duflo said. “Their products also contribute greatly to climate change.”

He characterized rich nations’ obligation to help poor countries manage the climate transition as a “moral debt” and said requiring the ultra-rich to pay more is fair.

“We’re not talking about extortion,” he said. “We’re talking about paying their fair share.”

Taxation, a “key concern”

At the same meeting, Brazil’s Finance Minister Fernando Haddad defended the focus on international taxation of the wealthy as essential to economic justice.

“International taxation is not simply the favorite topic of progressive economists; it is a key issue of concern that is at the heart of the global macroeconomic issue,” Haddad said.

“Inequality has been increasing, and the Sustainable Development Goals [de las Naciones Unidas] are increasingly distant,” he said. “During the Brazilian presidency of the G20, I have advocated for a new globalization based on social and environmental criteria.”

And he added: “Each country can go a long way individually. (…) However, without international cooperation, there is a limit to which national states can act. Without cooperation, those at the top will continue to evade our tax systems.” .

France and the IMF are also in favor

French Finance Minister Bruno Le Maire, at the same event, told Haddad: “You can count on the absolute support of France.”

“It’s a question of efficiency and fairness,” Le Maire said. “The idea is that everyone pays their fair share of their contribution.”

Also in favor was the managing director of the International Monetary Fund, Kristalina Georgieva, who said: “In most countries, the rich pay less taxes than the middle class and even the poor. Our first option is to close the loopholes and avoid tax evasion. We call on the international community to implement agreements that allow the sharing of tax information.”

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