(NewsNation) — Countries like Brazil, France and Germany want the world’s billionaires to pay a global wealth tax but the United States is reportedly against the idea.
Treasury Secretary Janet Yellen told the Wall Street Journal on Monday that the U.S. wouldn’t support a global wealth tax for the ultrawealthy — a topic that is expected to be discussed among G7 finance officials later this week.
“We believe in progressive taxation. But the notion of some common global arrangement for taxing billionaires with proceeds redistributed in some way — we’re not supportive of a process to try to achieve that. That’s something we can’t sign on to,” she said.
Proponents of a global tax on the super-rich say it would stop the world’s 3,000 billionaires from stashing their wealth in countries where they can avoid taxes. The idea is modeled after the global minimum tax on corporations, which more than 130 countries agreed to in 2021 but has since faced GOP opposition in Congress.
“It is crucial to ensure that our tax systems provide certainty, raise sufficient revenues, and treat all of our citizens fairly,” finance ministers for Brazil, Germany, South Africa and Spain wrote in a recent Guardian piece arguing in favor of the proposal.
The ministers said the tax could be designed as a minimum levy equivalent to 2% of the wealth of the ultrawealthy but would not apply to billionaires who already contribute a “fair share in income taxes.”
Such a tax would generate an estimated $250 billion in additional tax revenue each year, according to Gabriel Zucman, a French economist studying the idea.
Several challenges make a global wealth tax hard to implement. For one, wealth is difficult to measure and can fluctuate significantly from year to year. The plan would also require broad participation to be effective, otherwise it risks benefiting existing tax havens.
The US is also one of the few countries in the world that taxes its citizens on their worldwide income, which already makes it harder for Americans to shift their wealth elsewhere, the Journal noted.
Instead of backing a global wealth tax on billionaires, President Joe Biden has called for a plan requiring those worth more than $100 million to pay a 25% tax on all their earnings each year, including unrealized capital gains.