Biden’s Choice for US Treasury Leaves Door Open for Wealth Tax Hike | Business and economic news

Janet Yellen also sees no immediate lifting of Chinese tariffs, adding that polluters should pay for carbon emissions.

Treasury Secretary-designate Janet Yellen has said she will work with lawmakers to speed up a series of tax increases on businesses and wealthy Americans as the Biden administration tries to pass on spending on infrastructure and broaden the social safety net.

Yellen, who is awaiting Senate approval for the post, on Thursday submitted written responses to follow-up questions from members of the Senate Finance Committee on topics ranging from climate change to sanctions policy. The 114-page document was obtained by Bloomberg News.

The Senate finance committee is expected to bring Yellen’s appointment forward on Friday, although a full Senate confirmation vote may not take place until next week.

Here are some highlights from Yellen’s comments:

Tax policy

• Yellen has vowed to “work with members of Congress” to determine whether households earning less than $ 400,000 a year will be protected from any cancellation of President Donald Trump’s tax cuts in 2017 – something Biden promised during the election campaign.
• She also dodged the question of whether repealing the cap on state and local tax deductions, as proposed by Biden, would result in a significant tax cut for wealthy Americans while doing next to nothing for those in the bottom half of income distribution.
• She responded more directly to criticism of Biden’s plan to lower the federal estate tax threshold, saying “the richest six in a thousand estates would be taxed” under the plan.
• Yellen fended off criticism from Republicans that raising the corporate rate to 28% from 21%, as Biden proposes, would make the United States less competitive. The money could be used to invest in infrastructure and other programs that boost American businesses, she said.
• Yellen suggested that the rich could be audited at higher rates under his tenure. More robust IRS enforcement is one way to prevent Congress from generating more revenue

Ties between the Treasury and the Fed

• Yellen has suggested that she will not mount a new fight to revive several Federal Reserve lending facilities that have been phased out by her predecessor. “The Federal Reserve will continue to provide support to the economy through its ongoing programs and the use of its available tools, but as mandated by Congress, the 13 (3) facilities funded by the Cares Act will not be available, ”she wrote, referring to an article in the law governing the Fed
• At the same time, she said: “At the moment, taking too little action presents the greatest risk”
• She also pledged not to pressure the Fed over the scope of its asset purchases, a point of concern among some politicians and economists given the scale and impact of the Fed’s bond purchases. Fed. “I deeply understand why it is so important to maintain the Fed’s tradition of independence in monetary policy,” said former Fed chief

Exchange rate

• Yellen reiterated its promise on Tuesday that the United States would not seek a weaker currency, and made no reference to the “strong dollar” policy the Treasury had once followed.
• Asked about concerns surrounding the dollar’s role as the world’s primary reserve currency, she said that status is supported by the United States, which has the largest economy and the deepest and most liquid capital markets. “We are committed to maintaining a healthy economy and confidence in our financial system,” she said.
• Yellen said the administration will work, in all agencies, “to effectively lobby countries that intervene in the forex market to gain a trade advantage.”
• She pointed to bilateral deficits as an indicator of unfair trading practices, which she said she would “vigorously oppose”, although she said the gaps should be assessed in the context of states’ broader trading relationship. -United with each country rather than in one all metrics “

Chinese politics

• Yellen reiterated that there will be no immediate lifting of tariffs on China and that the Biden administration will monitor China’s fulfillment of promises made in the “phase one” bilateral trade deal. Trump administration.
• She also reiterated that the administration will use “the full range of tools” to counter “China’s abusive economic practices.” Strategy will include working with allies to take China’s ‘unfair’ action
• Yellen said it was important that aid from the IMF, the World Bank and elsewhere to help countries around the world fight Covid-19 did not end up repaying Chinese loans.
• More generally, Yellen said the United States must compete with China’s “economic government” in the world and establish partnerships distinguished from the signing of President Xi Jinping’s Belt and Road Initiative.

Debt issuance

• Yellen said she would review the Treasury debt issuance strategy, including the weighted average maturity of federal debt
• She did not immediately suggest any major changes. “Today, demand for existing treasury instruments remains strong and is sufficient to meet the financing needs of the United States. The introduction of new instruments in the very long term would add new complexities to this market and merits further study ”

Climate change

• “We cannot solve the climate crisis without effective carbon pricing,” Yellen wrote.
• “The president supports an enforcement mechanism that forces polluters to bear the full cost of the carbon pollution they emit”
• She also said tax policy should be used to encourage individuals and businesses to adopt “climate friendly policies”.
• Yellen warned ‘stranded assets’ could result from the development of new forms of clean energy

Foreign sanctions

• Yellen said the Treasury would “scrutinize the sanctions to ensure they are targeted, effective and minimize unintended consequences.” The Trump administration has imposed a wide range of sanctions on companies, individuals, and even oil tankers linked to Iran, North Korea, China, Venezuela and Russia – often unilaterally.
• “I pledge to rigorously apply the sanctions targeting Russian actors for territorial aggression in eastern Ukraine and Crimea and other threats to US national security,” she also said.

Agreement with Iran

• Yellen has said she will ensure Iran takes steps to “resume compliance” with the nuclear deal reached under the Obama administration, which will be necessary to justify the relief of sanctions.
• She also said she agreed that Iran is the world’s biggest sponsor of state terrorism.
  “I will ensure that the Treasury continues its important work of combating Iran’s support for terrorism and human rights violations.”

Cryptocurrencies

• “We need to take a close look at how to encourage their use for legitimate activities while reducing their use for malicious and illegal activities,” Yellen said.
• She is committed to working closely with the Fed and other regulators “on how to implement an effective regulatory framework for these and other fintech innovations”