Argentina passes tax on millionaires to cover COVID-19 relief; calls to do the same in U.S. foment

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Argentina has passed a measure implementing a tax on the country’s wealthiest residents in order to pay for COVID-19 relief following calls in the U.S. to do the same thing.

After a lengthy debate session that was live-streamed on YouTube, the Argentine senate’s pro-government coalition easily passed 42-26, which will affect about 12,000 millionaires in the South American nation, Yahoo News reported. The Chamber of Deputies has already passed the measure 133-115.

President Alberto Fernandez has said his government hopes to raise some 300 billion pesos ($3.75 billion) with the one-time tax, which will be used to pay for COVID-19 supplies and to provide financial relief to the nation’s poor and to small businesses.

The country of about 44 million has had about 1.4 million coronavirus cases with more than 39,000 deaths. The pandemic made worse the country’s already high unemployment rate stemming from a recession that began in 2018.

The law, called a “millionaire’s tax,” applies to citizens with declared assets of more than 200 million pesos. They will be required to pay a progressive tax rate up to 3.5 percent on their Argentina-based wealth, and up to 5.25 percent on wealth held outside of the country.

Twenty percent of the proceeds are to go towards medical supplies. Another 20 percent will be earmarked for small-to-medium-sized businesses, 15 percent for social services, 20 percent to student scholarships, and 25 percent to fund natural gas ventures, Yahoo News reported.

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“The tax reaches 0.8 percent of total taxpayers,” one of the bill’s authors, legislator Carlos Heller, said. “Forty-two percent have dollarized assets, of which 92 percent is located abroad.”

Opposition lawmakers, including Daniel Pelegrina, head of the Argentine Rural Society, say they fear the tax will become permanent.

Pelegrina said Heller “wants to present it as a contribution of the richest, but we know what happens with all those unique taxes, they stay forever.”

The notion of taxing the wealthy to provide COVID-19 relief has also been bandied about in the United States.

In July, 83 of the world’s richest people including Ben & Jerry’s ice cream co-founder Jerry Greenfield and Disney heir Abigail Disney implored “our governments to raise taxes on people like us” for COVID relief: “Immediately. Substantially. Permanently.”

“As Covid-19 strikes the world, millionaires like us have a critical role to play in healing our world,” they wrote in a letter distributed to media.

“No, we are not the ones caring for the sick in intensive care wards. We are not driving the ambulances that will bring the ill to hospitals. We are not restocking grocery store shelves or delivering food door to door,” the added. “But we do have money, lots of it. Money that is desperately needed now and will continue to be needed in the years ahead, as our world recovers from this crisis.”

In September, the left-leaning Center for Budget and Policy Priorities also said states should begin taxing wealth to pay for COVID relief.

“States should raise much-needed revenues by taxing wealth. Given the rising stock market, increasing home values, and high wage-earners’ relative ability to keep their jobs through the pandemic, this approach makes the most sense and is most equitable. States can choose from several options to tax wealth,” Samantha Waxman wrote.

And in October, the Boston Review made the same recommendation, stating, “COVID-19 provides all the more reason to tax the rich.”

“Our elected officials should pass another stimulus to help those suffering amid the economic downturn caused by COVID-19. They should also tax the rich—but not simply in order to pay for a stimulus,” the policy publication noted further.


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