Treasury Secretary Janet Yellen told CNBC Friday that the $1.75 trillion framework for President Joe Biden’s climate and social spending priorities is being “paid in full” in part by asking wealthy Americans to pay more taxes.
Yellen told CNBC’s Sarah Eisen in an interview on “Worldwide Exchange” from Rome, where G20 leaders are meeting for their first in-person summit since the Covid pandemic.
“Our collectors, though, are decent and fair. While there is no tax on billionaires, I think it has been agreed that high-income individuals … will pay an additional tax on their income tax rates,” Yellen said. “This really hits high-income individuals.”
A proposal to levy a tax on unrealized gains on billionaire wealth has been thwarted and there have been questions about whether it would be constitutional.
Yellen, the former Federal Reserve Chairman, accompanies Biden on his overseas trip to the G-20 Summit and United Nations Climate Change Conference in Glasgow, Scotland.
Before leaving Washington on Thursday, Biden announced an agreement with Democratic strongholds in the Senate on a scheme to spend on a wide range of programs to ease the financial burden on families and children while funding the renewable energy economy.
If passed, the massive spending bill would impose a minimum tax of 15% on corporate profits by large corporations, adopt the 15% global minimum tax brokered by Yellen, and apply a 5% surcharge rate on individual incomes over 10 million dollar. That rate would rise by another 3% on income above $25 million. The Democrats’ plan also includes a 1% surcharge on corporate stock buybacks.
“I don’t think these investments will lead to higher inflation at all,” Yellen said Friday. “First of all, they are paid in full — not by taxing anyone with less than $400,000 in income but by requiring high-income businesses and individuals to pay their fair share, and by investing in the Internal Revenue Service so they can increase and comply with dropped to low levels.” “We have a massive amount of uncollected tax revenue, an estimated $7 trillion tax gap over a decade.”
At the G-20, Yellen will take a victory tour over the minimum global corporate tax, which all member states agree on. The deal was negotiated between more than 130 countries.
Biden had hoped that rallying Democrats behind his spending priority framework would be enough to push a separate bipartisan infrastructure bill, which has already passed in the Senate, across the finish line in the House. However, the House on Thursday abandoned plans to vote on the infrastructure bill as progressives sought more time to consider the implications of both bills.