Treasury Secretary Janet Yellen signaled the administration is open to new corporate taxes but dismissed the idea of a ‘wealth levy,’ saying President Joe Biden opposes it.
Yellen said Biden favors boosting taxes on companies and could raise rates on capital gains, noting the idea was ‘worth considering.’
The administration is looking to boost the corporate tax to 28 per cent, Yellen noted.
But she ruled out a wealth tax – an idea favored by progressives.
‘A wealth tax has been discussed but is not something President Biden’ favors, Yellen said at a virtual Dealbook/DC Policy Project conference Monday hosted by the New York Times.
‘It’s something that has very difficult implementation problems,’ she noted.
Treasury Secretary Janet Yellen signaled the administration is open to new corporate taxes to help pay for COVID relief in an interview with the New York Times
In the wide-ranging interview, she discussed COVID relief, the climate crisis, bitcoin, and the $20 bill.
Yellen is pushing for revenue boosts to help pay for Biden’s $1.9 trillion COVID relief plan to help the long-term economic recovery from the coronavirus pandemic.
The U.S. unemployment rate is 6.3%, compared with 3.5% before the pandemic, which was widely seen as full employment.
But Yellen said that because 4 million people have dropped out of the labor force due to child care responsibilities arisen from the pandemic, the effective unemployment rate is close to 10%.
‘Really, though, if you count in addition to the almost 10 million who are registered as unemployed, if you add in the four million who have dropped out of the labor force — for health reasons, because they have child care responsibilities — and two million people who have reduced hours or pay, we’re looking at an unemployment rate that really is close to 10 percent,’ she noted.
She said she would judge the success of the plan by how quickly it returns the economy to pre-pandemic levels of unemployment.
‘Success to me would be if we could get back to pre-pandemic levels of unemployment and see the re-employment of those who have lost jobs in the service sector, particularly – I would also consider them a measure of success,’ she said.
‘Of course, a key job for a Treasury secretary is to make sure our country is on a sound fiscal course,’ she noted. ‘If you don’t spend what is necessary to get the economy quickly back on track, that has a fiscal cost as well.’
Treasury Secretary Janet Yellen said President Joe Biden doesn’t favor a ‘wealthy levy’ – an idea pushed by progressives
Yellen said she would measure her success as Biden’s Treasury chief if unemployment was reduced to pre-pandemic levels
And she downplayed concerns about the amount of debt such a plan could bring, arguing that due to low interest rates, U.S. interest expenses as a share of GDP are at 2007 levels.
She said the more important measure to her is the cost of debt.
‘Just look, for example, at interest payments on the debt as a share of G.D.P. Currently that’s under 2 percent,’ she said. ‘And it’s no higher than it was in 2007. So, I think we have more fiscal space than we used to because of the interest rate environment. And I think we should be using it now to address an emergency.’
She also expressed interest in the Federal Reserve developing a so-called digital dollar.
‘It makes sense for central banks to be looking at it,’ she said. ‘We do have a problem with financial inclusion. Too many Americans really don’t have access to easy payment systems and to banking accounts, and I think this is something that a digital dollar — a central bank digital currency — could help with. I think it could result in faster, safer and cheaper payments.’
And, finally, she addressed why it was taking so long to add Harriet Tubman’s portrait to the $20 bill.
‘It’s a complicated manufacturing process, so it takes longer to issue a new set of bills than you would imagine,’ she said. ‘But I promise I will do everything I possibly can to expedite this and I would love to see Harriet Tubman honored on our currency.’