The United States on Thursday rejected Brazil’s proposal at the G20 to introduce coordinated taxation on the super-rich across the world, calling on the states gathered in Rio de Janeiro for a meeting of finance ministers to each implement “fair and progressive” taxation.
Pushed by Brazilian President Lula, who this year chairs the group that brings together most of the world’s major economies as well as the European Union and the African Union, the issue will be on the table at a meeting in the afternoon.
Even before the meeting, Treasury Secretary Janet Yellen said at a news conference that her country saw “no need” to negotiate a tax on the largest fortunes internationally.
While stating that “the United States is very much in favor of progressive taxation,” the American leader called on “each state to ensure that its tax system” is “fair and progressive.” “Tax policy is very difficult to coordinate internationally,” she further stated to justify her rejection.
The day before, Brazilian Finance Minister Fernando Haddad had expressed his optimism on Brazilian television channel Globo, saying that “this idea has the support of several presidents” and that “it is possible that a declaration will be issued” at the G20.
President Luiz Inácio Lula da Silva, who again stated on Wednesday that “some individuals control more resources than entire countries,” intends to give a social tone to the Brazilian G20. On Wednesday, he launched a Global Alliance against Hunger and Poverty.
Looking for a joint statement
Inequality has continued to widen in recent years, according to a study by the NGO Oxfam published on Thursday: the richest 1% in the world have gained more than 40,000 billion dollars more in ten years, but their taxation is “historically” low.
French economist Gabriel Zucman estimates the tax rate for billionaires at 0.3% of their wealth. In a recent report commissioned by Brazil, he proposes creating a 2% tax on the wealth of the world’s 3,000 billionaires.
In addition to Washington, the German Finance Ministry, ahead of the G20, deemed the idea of a minimum wealth tax to be “irrelevant”, while several states, including France, Spain and South Africa, support the principle.
In addition to taxation and the international economic situation, this last meeting of the G20 finance ministers before the summit of heads of state and government on 18 and 19 November in Rio, must discuss financing the climate transition and debt on Friday.
With the G20 hampered by divisions between Western countries and Russia — also a member of the group — since the start of the war in Ukraine, drafting a joint communiqué remains a challenge. At their last meeting in February in São Paulo, G20 finance ministers failed to do so.
The solution imagined by Brazil is to arrive at three texts by Friday evening: a specific document on “international cooperation in tax matters”, accompanied by a broader final communiqué and finally a “declaration” published separately by the Brazilian presidency, which alone would mention geopolitical crises.
This model has already begun to be applied this week. The Brazilian presidency issued a “statement” on Wednesday reporting that some G20 members “shared their perspectives” on the wars in Ukraine and Gaza during discussions on the Global Alliance against Hunger and Poverty.
Some countries see the G20 as a relevant forum to discuss these issues, while others are of the opposite opinion.
Founded in 1999, the G20 brings together most of the world’s major economies. Its initial focus was primarily economic, but it has increasingly taken on the hot topics of global news.