Biden and Yellen support a global minimum tax on corporations. And a new wealth tax scheme is now in the works.
Watch Out for a Global Wealth Tax
The Wall Street Journal says Watch Out for a Global Wealth Tax
In our new socialist age, the demand to tax and redistribute income is insatiable. The latest brainstorm arrives in a proposal by four countries in the G-20 group of nations to impose a 2% wealth tax on the world’s billionaires.
“The tax could be designed as a minimum levy equivalent to 2% of the wealth of the super-rich,” write economic ministers of Germany, Spain, Brazil and South Africa in the Guardian. They say the levy would raise about $250 billion a year from some 3,000 billionaires and “would boost social justice and increase trust in the effectiveness of fiscal redistribution.” The countries plan to float this at the next G-20 meeting in June.
Presumably, the plan is to have the G-20 endorse the idea, including President Biden and Treasury Secretary Janet Yellen. Then negotiate a global tax deal that would wait until Democrats control all of the U.S. government to approve it, even if that takes many years.
That’s more or less what Ms. Yellen has done with her global minimum tax on corporations, and the four ministers are candid in saying this is their model. The wealth tax “is a necessary third pillar that complements the negotiations on the taxation of the digital economy and on a minimum corporate tax of 15% for multinationals,” the ministers write.
Ms. Yellen went along with the first two pillars, though as we’ve written they subject American companies to foreign tax raids of the kind the U.S. government has long opposed. An architect of the wealth tax idea is French socialist Gabriel Zucman, who was also behind Ms. Yellen’s global minimum tax. Once a global wealth tax is in place, you can be sure that billionaires won’t be the last target.
The Biden Administration is run by liberal internationalists who are happy to cede more power to multilateral institutions. President Biden is also campaigning on a wealth tax of his own that would impose the highest tax rates on Americans since before the Reagan tax reform. For this crowd, taxing American billionaires to redistribute income around the world is all too imaginable.
I used to dismiss ideas like this. Not anymore.
Letting the G-20 set US tax rates would be unconstitutional, but since when does Biden give a damn?
Besides, if Democrats get control of the Senate, House and White House they may try to pack the courts.
For more on the unconstitutional wealth tax on unrealized gains, please see Biden Embraces a Wealth Tax to Address Racial Wealth Inequality
I go over 15 ways Biden seeks to address “wealth inequality”.
Wealth tax is unconstitutional just like Social Security, Medicare, Medicaid, Welfare, Student loans, and some other federal programs. That is the real problem
We don’t need a wealth tax to reduce inequality. We need to reduce the original sources of inequality, including at mininum (a) excessively high corporate profit margins, and (b) anomalously low interest rates which lead to over-valuation of passive income streams.
The good news is, resurgent inflation will do a lot of the work for us. Inflation will drive up interest rates (again) causing bond markets to crash (further). The high interest rates plus QT lead to a credit crunch – a reduction in size of bond market vs. GDP – which as a side effect reduces wealth inequality by literally limiting the amount of credit owned by the 0.1%, and also reducing the total debt owed by the 90%. The credit crunch will also crush the stock market, which further clips the wings of the ultra-rich.
Meanwhile, the birthrate crisis limits supply of labor worldwide, which rebalances labor income relative to corporate income.
Finally, the secret sauce is to also restore enforcement of antitrust law. Breaking up the high-profit-margin monopolies and restoring competition gives a triple benefit in reducing inequality. It simultaneously limits corporate profits, reduces inflation (by holding down consumer costs) and increases the share of national income that goes to workers vs. owners.
Nearly every major economic imbalance gets better on its own if we merely act to stop inflation and break up monopolies to rebalance labor-vs-capital income.
History says when financial crisis hit lower income earners got much more impacted. Remember 2008 gfc ..
The West has a spending problem, not a taxation problem. Politicians know this, but they’re trapped.
Yes and no. In the 2008 financial crisis, policymakers had leeway to lower interest rates, do deficit spending, and expand credit via the Federal Reserve balance sheet. I agree that response protected the wealthy, while the poor got laid off and foreclosed on. This was a terrible betrayal, and the millions who suffered will never forget.
But in the ongoing inflationary financial crisis, those policy options are no longer viable since they all exacerbate inflation.
For the first time since China entered global markets in the 1980s, labor is no longer over-supplied, and that will drive a rebalancing of labor vs. capital, which means everything else changes.
Per Thomas Piketty, who said that the Great Depression was great at reducing inequality. Now just combine it with a soviet (as opposed to ‘Bolshevik’) revolution and appropriation of the means of production away from the 1%. (/consider_if_sarcasm)
If the US public had any balls, we would be out decorating lamp posts.
First, I guess this is worth repeating:
“Bad Govt.
A central problem with Ellen Willis’ approach in _Don’t Think, Smile/ Notes on a Decade of Denial_ was expressed by F.A.Hayek in _The Road to Serfdom_ and George Orwell in _Animal Farm_: To eliminate such distinctions among persons as ability or wealth, someone must be empowered to do so, and that person or those persons will be unequal in political power to the rest of us, which means that one kind of inequality will merely have been substituted for another. And, given what we know of human motivation and history, such political
power will soon be converted back into inequalities in wealth and status, thus compounding the inequality. – Tom Palmer, Cato Policy Report 7-2000”
Has there ever been a tax a democrat didn’t approve of?
I bet the estate tax remains as it is currently. The Democrat politicians do see themselves getting rich and they want to be able to pass it along. 26 million/couple will remain the law, adjusted for inflation.
It would take congress to enact this.
For domestic taxation, yes, not international, that’s the executive, per the Constitution.
Yellen and Biden look like the Arch Duke Ferdinand and his wife riding in a horse drawn carriage yelling at kids to get off their lawn.
meanwhile, all the other global powers started arguing about how to divvy up the former Austria-Hungarian / Hapsburg empire.
The British monarchy is sort of still around I guess? Some guy with big ears keeps yammering in a castle he didn’t build about late century architecture. his brother is a pedophile. One child is getting fleeced by a hollywood gold digger, while the other is prematurely bald. I’m sure it will be fine.
But this elderly couple in the USA? I have to wonder how they can possibly pay their debts? Seems they can’t. There are some millenials and Gen Zers with some skills, but not enough. Most are useless social justice warriors that depend on welfare checks.
I guess they could peg it at the inflation rate?
I Hate what Yellen is doing to the US economic with high interest rates, and Biden’s pick and choose taxing policies, saying he’s helping the middle class by taxing the 1% income earners,this won’t work and it has never worked, maybe more votes from the low information voters, in the meantime our NJ Governor and The President want to give BILLIONS of Government Dollars to Foreign Windmill Corporations, The G-20 – oh let’s see how we can get more money from the working class , You tax the wealthy, the working people pay! Higher rents , mortgages, insurance,groceries, everything!How about the tax rate going up at the end of year for everyone maybe stop the upcoming tax rates for next year, I can’t take Government leadership anymore,
When it comes to packing the court, I think if Trump and the republicans win, they should do just that, add 4 more conservative justices to the Supreme Court. after all, the dems think it is the right thing to do. howe could they complain?
ALL income and wealth taxes start off on the “rich”, then always, always trickle down to everyone else.
Case in point: after the 16th amendment was passed, the first constitutionally based US income tax was promised to be just on the “rich”, 1% of incomes over $3,000 (about $100K in 2024 dollars), then going up to as high as 7% for the super high earners, levels that seem quaint today.
LOL.
With this banal tautology they hope to conquer the world.
I’m all in favor of “redistribution”, hopefully not as a result of disastrous wars and strife, but surely not by the powers-that-be. Inequality can only be addressed by changing the rules of the game and making sure the playing field is not tilted so the water runs downhill. Attempting to change the result/outcome instead of the root causes is a recipe for revolution & war.
Society is based on mutual cooperation, very important to keep in mind when thinking about policies, incentives, and measures when your aim is not destruction.
Elinimate crony capitalism like we have and elinimate campaign donations which are essentially legalized bribery. Best government money can buy.
Spending will simply increase. No thanks.
what a fun way to goose the price of gold…..
The mighty British pound sterling, the global reserve currency of the British Empire ruler of the seven seas… its name comes from a POUND of STERLING (aka silver).
Silver is running about $20 per ounce the last few years (higher recently, but lets stay conservative). There are 16 oz per pound …so the mighty GBP should be trading around $320.
If all else fails and a bunch of cowardly British monarchs and geriatric parlimentarians screw up, they can always print more GBP!!!
Lets see how the GBP compares with $320 USD to the GBP… DOH!!!!!
Similar story (but far worse outcome) for the Austrian Shilling, the French Franc (8-10 francs ago, France failed repeatedly), the Dutch Guilder, the Spanish Peso…
History is filled with global reserve currencies that could never fail, and they could always just print more Zimbabwe dollars.
Gold prices are **not** going up, rather the dollar is collapsing (that is a very important distinction)
The G20 is bankrupt (all of them), and the bond markets are telling them that severe yield increases or severe spending cuts will be imposed.
Like a bunch of infants (or geriatrics?) they are throwing a massive temper tantrum.
Throughout history, when the global super power has a massive increase in debt-to-GDP ratios, when it has massive and chronic spending deficits, when it suffers a humiliating military defeat … any one or two of those things entails a big kick in the gonads if not regime change. When all three happen, the regime usually collapses but occasionally survives as a a frail shadow of its former self.
The US military was humiliated in Afghanistan and Iraq (and didn’t exactly prevail in Libya or Syria). NATO faces imminent defeat in Ukraine. The debt-to-GDP ratio of the US government resembles an emerging economy. Two trillion deficits as far as the GAO will project. Very unfavorable demographics.
High single digit inflation won’t cut it, and the bond market is telling Yellen she is in deep sh!t. Severe spending cuts or regime collapse lady — you figure it out or we will do it for you.
Queue Mish and others rambling on about how the US dollar is special, and won’t meet the same fate as dozens of other former world currencies who were irresponsible and had stupid leadership.
In the meantime, the octogenarian losers at the G20 are behaving like every other cornered animal. Making stupid and insane moves in a desperate attempt to delay the inevitable.
So the G20 is pushing for it … who gets the $s? If we think the US gov’t gets to keep the dollars from all US billionaires … I think we’re being silly. If it goes into a global pool, we can kiss it goodbye. And this gets past how harmful this will be for the economy. I’m not a 1% (not even close) … but I depend on a healthy economy and eating the rich has never worked out well for an economy.
The WSJ should take a refresher. They say, “The Biden Administration is run by liberal internationalists . . .” There isn’t a thing “liberal” in this.
Bankruptcy for the USA is imminent. Time to hire some experts from Argentina who have had multiple experiences filing for bankruptcy.
Good idea. Who is going to collect Putin’s wealth taxes? And Hamas leaders’?
Financial and social stability necessarily requires preventing imbalances due to accumulations. The question is how to achieve it. Estate and capital gains taxes are the fairest means. An estate tax allows for the longest productive use of one’s capital. A capital gains tax instead of an earned income tax allows for people to establish themselves financially earlier in their lives when they incur the most debt (a mathematical destabilizing force).
Wow, well I guess 1 person here is for wealth redistribution globally. Most of the rest of this have seen the affects of socialism and marxism and know it would cause poverty like we have been eliminating for decades.
Q for MISH (Yellen?): IF BTFP is supposed to roll off after 12 months, why is it not rolling off to the same levels as 12 months prior?
In other words, if the BTFP level was $81BIL 12 months ago, why is it not $81Bil today? Should be running off?
link to fred.stlouisfed.org
There is no new issuance. Runoff will depend on the duration (term) of past issuance.
Letting the G20 set US tax rates is revoltingly unconstitutional and violates the sovereignty of every country involved, but its kosher as long as the legislature approves it. Plus, a law is only as good as its enforcement. Every year 85,000 avg. pages of the Federal Register get translated into 150,000 odd pages of the CFR. By now there are tens of millions of laws that cannot possibly be enforced — and aren’t — and won’t. Enforcement of law, at least on the corporate level, clearly comes down to punishing the disloyal to the regime.
It’ll be interesting to see how much income inequality it takes for Marx to be right about capitalism destroying itself.
It’s not capitalism destroying itself. Capitalism has brough up the wealthy and the poor, the fact that academia, the media, and one political party have convinced middle class people that billionaires are why they don’t have everything … is not the fault of capitalism. Those pushing that are preaching from the Communist Manifesto.
Free market capitalism has lifted people out of povery and andenriched more people then any other poliitical/economic system in world history. It is when its corrupted via crony capitalism when the imbalances occur. The fed is also is a big contributing factor to wealth inequality.
Yes, that’s pretty much what Marx says will lead to its collapse. Look who’s a Marxist now!
Capitalism, in any meaningful guise, can not, hence does not, exist in any society with fiat money. Once you have arbitrarily printed up and handed out fiat money, all you have is one form of totalitarian command economy or another.
It makes exactly, 100%, no difference, in any way, whatsoever, whether a totalitarian state refers to the 5year planners handed command over all resources, as “politburo” or “Investors” or “the community.” None of that is anything other than pointless nomenclature, employed to make illiterate indoctrinati fall for the idiocy that their particular Dear Leader is any more “just”, nor even different, than what Stalin was.
Thinking of it like a federal property tax on all property.
Financial assets would be kind of straightforward to tax. Taxing fine art, collector cars, etc seems challenging.
Such a tax should drag on the stock market, encourage the wealthy to hide value in other assets. Good for physical gold.
Wealth taxes will never work because wealth is not money. You can’t sell the farm and have the farm at the same time.
Au contraire, Blackrock to the rescue!
They just joined the bandwagon of real estate tokenization … allows fractional sale/ownership…just hand the USG 2% of your tokens each year.
Wall Street is happy to help the USG take your money (after 10% for the Big Guy).
They don’t teach this stuff in school anymore, but in 1914 the US income tax started at only 1%, and it only applied to the very top income earners. Look where we are today.
A 2% global wealth tax would only be their foot in the door to eventually tax everyone on the planet.
Yes Sir. And many/most elected political positions were a part time job.
We have NOT made progress. We need to revert back
How do you address inequality though? Trickle down economics doesn’t work. Offshoring production hits the working and middle classes and in capitalist/libertarian system can’t be reversed without economic reasons. Automation and AI risk further job losses. Wealth disparity is growing. A rehaul of our fiat currency system might be a solution but this won’t happen voluntary and likely only when the post war Bretton Woods system burns to the ground. So what is the solution?
There will always be inequality. However, it has been massively increased by the lack of sound money, which, of course was supported by virtually all governments.
@ Neil…In answer to your question… COMMUNISM. Is that what you want?
No. But I would rather be able to keep and spend most of the money I earn, not hand over ~60% of my pay to the tax man under various schemes. I am of course an average earner. If taxes are required to keep some services going, then killing the middle classes doesn’t help
Inflation caused by the FED, massive deficits by politicians and constant war are highly inflationary. Inflation is a tax (weather most people understand it or not). In direct taxation, government ends with the money and you with less purchasing power. In stealth taxation (inflation), the government still ends with the new printed money and you with less purchasing power.
Not only the inflation is a tax, it is the most REGRESSIVE form of taxation. Therefore, you have an ever growing inequality caused by profilgate spending of democrats.
Inequality is not bad. Poverty is bad and poverty has gone down vastly in the last 50 years. If you are doing OK, why does it matter that someone else has a million dollars. Marx has had his impact on you … please sit back and think about it.
There’s inequality, and then there’s extortion, which is where the tax burden is currently (for middle income earners). The inequality I see is two full time working parents earning a decent salary each barely managing to keep heads above water, when XXXX has so much excess money to spend they swap yachts every year
The thing is it’s not the billionaires taking the money from you, rather it’s the masses of poor who get handouts.
Think about 1 billion dollars divided among 100 million tax payers. That’s only 10 dollars a tax payer. That’s all it costs you as a tax payer for someone to have accumulated 1 billion dollars (or rather if you distributed 1 billion from them as taxes it would lower your burden by 10 dollars).
Now look at the welfare cost. 1.19 trillion a year on 80 programs
link to budget.house.gov
That’s 1190x as much tax burden or 11,900 of your tax dollars.
What needs to happen is that we need to get *some* work from the welfare class to lower the labor burden on the middle class. Even if they worked $10 hr jobs and got 10/hr in welfare that’s infinitely better than $20/hr welfare even if some business owner benefits slightly from the 10/hr labor (in truth we’d bring back more jobs if we could have 7/hr welfare labor even with paying 13 more in welfare benefits).
Your point is taxes are too high on the middle class … you’ll find lots of agreement here on that. However, taxing ONLY the rich isn’t a solution either … leads to the population confiscation of wealth (vote in more benefits).
Solution: massive cuts to USG spending (think Argentina chainsaw) including cuts to transfer payments (yes, SS/Medicare too).
Not sure if that’ll fix housing prices; it will reduce interest rates and inflation.
Old Man yells at passing cloud:
Government wants things centralized as it so much easier to control things that way.
Some people are 10x more productive than others. Society has to reward the productive while providing dignified lives for everyone. If the productive are not rewarded society begins to fail. What sounds good (yay socialism!) doesn’t work for the benefit of most. Invention is passed on to current and future humanity. Kill invention and then what’s the point? Note China has had to steal almost everything from the West, but boy are they good at it.
Here are a few ways to reduce inequality:
Many others at the local level such as building permits, school administration, taxes, fees that inhibit productive activity.
None of this will happen.
If you don’t understand how the above list will help inequality, I don’t know what to say.
“The tax could be designed as a minimum levy equivalent to 2% of the wealth of the super-rich,” write economic ministers of Germany, Spain, Brazil and South Africa in the Guardian. “They say the levy would raise about $250 billion a year…”
That’s a foot in the door, just as “two weeks to bend the curve” was. How fast is the U.S. government debt clock alone, piling up deficits? Allegedly, interest could reach 900 billion this year. $250 billion won’t go very far in a world awash in government debt. The tax will quickly reach down below the super-rich.
Luckily for us, old geezer Biden will be put out to pasture before this is even considered.
White House staffers have been enacting “weekend at Bernie’s” for three and a half years already.
This will end because foreign creditors and domestic market pundits (not Mish, but many others) are openly stating that US Treasuries are **NOT** money good. The octogenarians in both parties won’t be around to pay, and the AOC marxists are third world losers who also won’t pay.
US government spending will get slashed. The only question is whether US citizenry will slash our own government, or will foreign creditors do it.
Don’t hold your breath waiting for the cowards that took on this debt (Biden, Schumer, McConnel, Graham, Pelosi, etc etc etc) to act like parents and set their kids up for a better life. These people are cowards and losers. The G20 bureaucrats are all parasites, eating off the tit of Washington DC. When DC gets slashed, the G20 gets eliminated completely, so of course they are terrified
My view is that they are trying to set up conditions for a Franklin Roosevelt 2.0 where the tax rate was set high on high-net-worth people in order to reduce the accumulation of wealth going to a smaller and smaller set of people and where the tax burden falls on a smaller and more impoverished middle class. Apparently they believe that this is not only unsustainable but also suicidal.
The top 1% pay 38% of the federal tax. The top 10% pay 72% of the federal tax … “All tax falls on the middle class” is a myth.
Of federal INCOME taxes but payroll taxes fall largely on the middle class and represent over 1/3 of federal tax receipts. Mish gives better numbers below.
The richer you are the less you pay as a percentage. That 38% is what is left over after all the tax breaks have been used up.
“Letting the G-20 set US tax rates would be unconstitutional, but since when does Biden give a damn?”
Democracy is majority rule. Constitutions are by their nature, anti democracy, as they are restrictive of majority rule. Signing on to the WHO Pandemic Treaty and International Health Regulations would allow Tedros to become world dictator by declaring a global health emergency. One Health is a broad brush. It is not just about pandemics and is re-distributionist and global authoritarian.
This is a constitutional republic … democracy is mob rule. The George Floyd riots showed how well that works.
If the wealthy aren’t taxed, it gets squeezed out of the poor one way or another. Nice of you guys to stick up for people that wouldn’t piss on you if you were on fire.
The top 10% pay over 52% of all taxes.
The top 50% pay 97.7 percent of taxes.
The bottom 40% pay negative taxes. so you are clueless.
As a member of the squeezed middle class in the UK, I estimate over half my pay goes towards taxes of one shape or another. You can’t tax the poor heavily as they have little to tax ( apart from VAT that hits the poorest disproportionately) UK runds permanent twin deficits – unsustainable. Wealth leaks to offshore tax havens and the propertied classes. If not taxing the ultra wealthy in a way that prevents transfer of capital from one haven to the next, what is the solution?
The solution is to Guillotine the ruling socialist fascists. In UK the socialists include Tories and Labor. Liz Truss would have fixed the problems but you blew it. Your best bet is Richard Tice of the Reform Party.
So the solution is to tax the people that don’t have money?
I don’t think spending will ever decrease.
You’re talking federal income taxes … there’s a lot more tax draw.
Zardoz, nice to see you back
Given the uproar over how Trump valued just Mar-A-Largo can you imagine that multiplied by 3000 billionaires across all their assets?
Imagine the fight if your are Jerry Jones and own the Cowboys (and pretty much nothing else) and Forbes says they are worth 9 billion this year after being worth 8 billion last year and 5.5 billion in 2020. Since they are something unique, what’s the exact value and what kind of tax would he have to pay given he has no money to pay it. It would be a endless legal nightmare of wrangling over asset values that you can’t truly value unless they are sold.
What else will all the new IRS agents be doing?
You are logical which won’t work in a political debate. 🙂
It will end up being another tax on the middle class, not billionaires.
G-20? Just send the Eurotrash all of the cigarettes they want.
Wouldn’t more billionaires just escape to non G20 countries ?
I suspect you’d be able to freely leave but unless you took your assets with you, they would remain within the G20 and thus subject to taxes.
Luckily the G20 includes like China, Russia etc who are unlikely to agree to something like this especially given the current political climate.
I imagine that they would agree but actually not have any of the billionaires oligarchs pay it (ie: hide wealth). How exactly are we going to tell what Putin or Xi is worth? how about the oligarchs. We are going to see BRICS separate sooner rather than later if we try to enforce this … and we won’t.
There are very few non G20 countries that are worth living in for billionaires. Anyway if you are an American citizen you still have to pay taxes to the US.
The G20 is irrelevant just like the UN is irrelevant. This is a sovereign nation.
Theoretically true, but the US will enforce it and then this sovereign nation is going to have no problem treating sovereign citizens like slaves.
I don’t mind the tax so much as what the global bureaucrats will spend it on. Therein lies the problem. Power of the oligarchs is still fragmented given competing interests. Power of one global government?
The Supremes are aware, and Sonia is a blind, obese, 69 year old, Type I diabetic with no plans for retirement. Sonia is in for a surprise.
I never understood the concept of the government redistributing wealth, that happens over time as heirs blow the wealth of thier ancestors and hard working people benefit. Redistribution by the government disincentivises hard work.
Also, rich people are the best people to provide services and they buy top end products. Without “rich” people, who would I sell to? I contend rich people are not our problem, the problem is our system allows rich people to control who is elected and to influence legislation, etc. I contend we’d be better off randomly choosing our federal representatives among qualified candidates. Draft our representatives to serve, basically. Elections don’t mean much to me anymore. Term limits would help, otherwise. The power has so much time to concentrate and then we can’t stop electing the same people over and over again. Other than the ability to control the government, I’m all for more rich people! It’s who I sell to. It’s who spends money on the things under development, etc. I don’t hate on them, I just want them to be passive toward using the government to get what they want by totalitarianism. Why compete, when one can effectively decree what they want?