US rejects plan for G20 deal to tax super-rich

RIO DE JANEIRO: The United States sees no need to negotiate an international agreement on taxing the super-wealthy, US Treasury Secretary Janet Yellen said Thursday, highlighting divisions on a plan that is top of the agenda at a G20 finance ministers’ meeting in Rio de Janeiro.

Taxing the ultra-rich is a key priority of Brazil’s leftist president, Luiz Inacio Lula da Silva, who this year heads the G20 grouping of the world’s major economies, the European Union and African Union.

“Tax policy is very difficult to coordinate globally,” Yellen told a press conference in Rio de Janeiro, ahead of an evening meeting between finance ministers to discuss the topic. “We don’t see a need or really think it’s desirable to try to negotiate a global agreement on that. We think that all countries should make sure that their taxation systems are fair and progressive.”

Yellen said Washington was “strongly supportive of progressive taxation, and making sure that very wealthy, high-income individuals pay their fair share.” She highlighted policies proposed by US President Joe Biden, such as a billionaires’ tax, which she described as “a very worthwhile initiative.” “It makes sense for most countries to take this approach of progressive taxation.”

Brazil’s search for a global agreement on taxing the richest of the rich is backed by France, Spain, South Africa, Colombia and the African Union.

“Some individuals control more resources than entire countries,” Lula said Wednesday at the launch of an initiative to fight world hunger, another project topping his G20 agenda. His finance minister, Fernando Haddad, told local media Wednesday that taxing billionaires would help finance the fight against hunger but “it will not be established overnight, because it is a very delicate mechanism.”

Global inequality has continued to widen in recent years, according to a study by the NGO Oxfam published Thursday. The richest one percent of the world have earned more than $40 trillion in a decade, but their taxation is at “historically” low rates, the study said.French economist Gabriel Zucman, a consultant with the G20 on taxation issues, estimates that the tax rate for billionaires represents 0.3 percent of their wealth.

In a recent report commissioned by the G20, he called for super-wealthy individuals to be taxed the equivalent of two percent of their fortune.Washington is not the only skeptic.On the eve of the G20 meeting, Germany’s finance ministry said it considers the idea of a minimum wealth tax to be “irrelevant.”

The meeting of finance ministers in Rio opened with a session on the global economy, as inflation slows in many parts of the world after a surge fuelled by the war in Ukraine and other factors.

On Friday, the ministers will tackle the financing of the climate transition and debt in their last meeting before a G20 summit on November 18 and 19.

Divisions within the G20, of which Russia is also a member, have made drafting a joint communique at the outcome of meetings a challenge. Aside from a joint final communique, this would include a document on “international cooperation in tax matters” and a separate communique from Brazil on geopolitical crises.