Treasury Secretary Janet Yellen said the Biden administration is working with other like-minded world leaders to introduce global minimum tax rates for businesses.
In a virtual speech delivered to the Chicago Global Affairs Council of think tanks, Jellen said that over the past three decades, countries have been “race to the bottom” trying to lower corporate tax rates to incentivize multinationals. I lamented that. We offset costs through accounting moves to transfer revenue to countries with low corporate taxes, including US-owned companies.
“Competitiveness is more than a way for a US-based company to compete with other companies in a global merger or acquisition bid,” Yellen said. “Ensure a stable tax system in which the government invests in important public goods, raises enough income to respond to the crisis, and ensures that all citizens share the burden of government financing fairly. is.”
She states: “We are working with the G20 countries to agree on a global minimum corporate tax rate that can stop race to the bottom. Together, we are a multinational corporation using a global minimum tax. We can ensure that the world economy thrives and promotes innovation, growth and prosperity on the basis of a more equal competitive arena in taxation. “
“It is important to work with other countries to end the pressure of tax competition and corporate tax source erosion,” the Biden administration added, Yellen added.
Yellen’s speech precedes this week’s World Bank and International Monetary Fund virtual conference. Her statement essentially supports negotiations underway for nearly two years at the Organization for Economic Co-operation and Development in 37 countries, Alan Auerbach, an economist at the University of California, Berkeley, told The Associated Press.
President Joe Biden said last week, “A $ 2 trillion infrastructure bill.”American Employment PlanPartial funding will need to be raised by raising the US corporate tax rate from the current 21% to 28%, which has been in place since 2017 when former President Donald Trump signed the Tax Cuts and Jobs Act (TCJA). ) It reduced the rate from 35 percent.
Biden also proposed a minimum tax credit on foreign corporate income of 21% (twice the current 10.5%) and abolish tax credits on foreign income.
The US Employment Plan also advocates a global minimum tax rate for businesses.
“The United States is currently seeking a strong global agreement on minimum taxes through multilateral negotiations. This provision clarifies our commitment to global minimum taxes. It is time to level the competition. Come and no longer allow the country to gain competitiveness by lowering corporate tax rates, “Whitehouse reads. Fact sheet About the proposal.
“The minimum tax for US companies alone is not enough. Still, foreign companies can deprive the US of profits, and US companies may be exempt from US taxes by diverting their headquarters abroad. The practice must end. ” “President Biden, like the United States, is also proposing to encourage other countries to adopt strong minimum taxes on businesses.”
“There is no evidence,” Biden said when asked if raising US corporate tax rates could drive businesses abroad.
“The tax was 36%, but now it’s 21% … strangely, we’re talking about the 28% tax, but everyone thought it was fair enough,” he said. Said. “Here are 51 or 52 Fortune 500 companies paying a penny for three years. Come on, man. Let’s be real.”
Raising the corporate tax rate to 28% raises the combined US tax rate to 32.34%, the highest tax rate in the OECD, effectively reducing the competitiveness of the United States. , Reported (pdf).The average corporate tax rate for OECD countries excluding the United States 23.4%..
“We expect this to reduce long-term economic production by 0.8%, reduce 159,000 jobs and reduce wages by 0.7%,” the Foundation said in February.