Largest GDP in the world, the US reject Lula’s proposal in the G20 to tax billionaires

Brasil de Fato

On Thursday (25), finance ministers of G20 countries meeting in Rio de Janeiro diverged on the proposal of taxing large fortunes, defended by Brazil but rejected by the United States, which wants each country to adopt its own “fair and progressive” tax system.

According to a study by the NGO Oxfam published on Thursday, 1% of the world’s richest people have seen their wealth grow by US$ 42 trillion in a decade, but their taxation is “historically” low.

The initiative to tax the super-rich is being promoted within the G20 by President Luiz Inácio Lula da Silva, who chairs the group of the largest global economies. Finance ministers discussed the issue at a meeting on Thursday afternoon (25), but US Secretary of Treasury Janet Yellen has already said that her country is against a globally coordinated tax.

“Fiscal policy is complicated to coordinate globally. We do not see the need nor do we believe it is desirable to try to negotiate a global agreement on this issue,” Yellen said at a press conference, advocating that each country implement its own ‘fair and progressive’ tax system. “The United States strongly supports a progressive tax system to ensure that the super-rich and high-income individuals pay their fair share,” she explained.

On Wednesday (24), when announcing the creation of the Global Alliance Against Hunger and Poverty, Lula pointed out that “a few individuals control more resources than entire countries.” The alliance is Brazil’s main project while presiding the G20. Fernando Haddad, the Brazilian Minister of Finance, argued that taxing billionaires would be an instrument to finance the fight against hunger.

Washington and Berlin against a globally coordinated tax

The idea of a global coordinated tax on the super-rich was first mentioned at the beginning of the year and has gradually gained the support of several countries, such as France, Spain and South Africa. French economist Gabriel Zucman estimates that the tax rate paid by billionaires is 0.3% of their wealth.

In a recent report prepared at Brazil’s request, Zucman proposed creating a 2% tax on the wealth of around 3,000 billionaires. However, not all G20 countries support this idea. In addition to the US, the German Finance Ministry, on the eve of the G20 meeting, considered a minimum wealth tax “not very relevant.”