Yellen States US Stance Against Imposing a Global Wealth Tax on Ultra-Rich

July 25, 2024 TruthUSA

A proposal for a worldwide tax on the assets of the ultra-wealthy is being advocated by certain countries within the G20. However, Treasury Secretary Janet Yellen has stated that the Biden administration does not support this initiative.

Ms. Yellen told reporters at a press conference during the G20 finance ministers meeting in Rio de Janeiro, Brazil, on July 25 that the United States believes that reaching a global consensus on taxing ultra-high-net-worth individuals is not feasible or advisable.

“Tax policy is very difficult to coordinate globally,” Ms. Yellen said. “We don’t see a need or really think it’s desirable to try to negotiate a global agreement on that.”

The proposal for a new global tax on billionaires was put forth by the European Union Tax Observatory last year. The Brazilian G20 presidency recently requested further details on this proposal from its researchers.

French economist Gabriel Zucman, a key figure behind the plan, suggests that individuals with a net worth exceeding $1 billion should be obligated to pay a minimum annual tax equal to 2 percent of their wealth. This tax is referred to as the “ultra-high-net-worth tax.”

The rationale for basing the minimum tax on wealth rather than income is that wealth is harder to manipulate, as outlined in the proposal.

Mr. Zucman estimates in his report to the G20 that such a tax on billionaires could generate between $200 billion and $250 billion annually from around 3,000 individuals. Extending the tax to individuals with assets over $100 million could yield an additional $100 billion to $140 billion each year.

Participating countries would cooperate on a global level to enforce the tax through various domestic mechanisms, including income and wealth taxes.

The present time is deemed suitable for implementing such a tax by the French economist because of the reduced bank secrecy laws over the past 15 years due to increased global information exchange. A key challenge to successful implementation is information gaps, which Mr. Zucman believes can be resolved through improved surveillance to identify asset owners.

The global ultra-high-net-worth tax proposal aims to enhance the effectiveness of progressive taxation. Mr. Zucman contends that existing tax systems are ineffective in adequately taxing the wealthiest individuals, thereby undermining tax progressivity and its associated advantages.

Ms. Yellen, while expressing skepticism about the global ultra-high-net-worth tax, remains a supporter of progressive taxation.

“We believe that all countries should ensure that their tax systems are fair and progressive,” Ms. Yellen stated.

The Treasury Secretary noted that the Biden administration strongly backs progressive taxation and ensuring that wealthy individuals contribute their fair share.

She highlighted President Joe Biden’s proposed policies, including a billionaires’ tax, which she described as “a very worthwhile initiative.”

President Biden has put forth a plan for a billionaire’s tax that would establish a minimum 25 percent tax rate for the nation’s billionaires, generating an estimated $500 billion in revenue over a decade.

Critics of a billionaire’s tax have raised concerns about potential legal obstacles, including constitutional challenges regarding its classification as a type of direct tax prohibited under the U.S. Constitution.

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