Treasury Secretary Janet Yellen told CNBC on Friday that the $ 1.75 trillion framework for President Joe Biden’s social and climate spending priorities was “fully paid” in part by asking wealthy Americans to pay more taxes.
“We tried to design a set of revenue streams that would be acceptable to members of Congress. We came close to some rate increases that were not acceptable to members of the Senate,” Yellen told Sara Eisen of CNBC in an interview on Rome’s “Worldwide Exchange” where Group of 20 leaders meet for their first face-to-face summit since the Covid pandemic.
“The increases we have, however, are appropriate, fair. While there is no market value tax on billionaires, I think it has been agreed that people with high incomes … Will pay a surtax on their income tax rates, ”Yellen says. “It hits very high income people.”
The proposal for a tax on unrealized capital gains on billionaire fortunes was scuttled and questions were raised as to whether it would even be constitutional.
Yellen, former chairman of the Federal Reserve, accompanies Biden on his overseas trip to the G20 summit and the United Nations climate change conference in Glasgow, Scotland.
Before leaving Washington on Thursday, Biden announced an agreement with Senate Democrats on a spending plan for 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 15% minimum tax on large corporate profits, adopt the 15% overall minimum tax negotiated by Yellen, and apply a 5% surtax rate on corporate profits. individual incomes greater than $ 10 million. This rate would increase by a further 3% on revenues over $ 25 million. The Democrats’ plan also includes a 1% surtax on corporate share buybacks.
“I don’t think these investments will drive inflation up at all,” Yellen said on Friday. “First of all, they’re paid in full – not by taxing anyone earning less than $ 400,000, but by asking businesses, high-income people to pay their fair share, and by investing in it. Internal Revenue Service so that they can increase compliance, which has fallen to low levels, ”she added.“ We have a huge amount of uncollected tax revenue, an estimated tax gap of $ 7 trillion on a decade.”
At the G20, Yellen will take a victory lap on the global minimum corporate tax, which all member countries agree to. The agreement has been negotiated between more than 130 countries.
Biden had hoped that rallying Democrats around his spending priorities would be enough to push a separate bipartisan infrastructure bill, which has already passed in the Senate, to cross the finish line in the House. However, the House on Thursday abandoned its draft vote on the infrastructure bill, with progressives seeking more time to consider the implications on the two bills.