Treasury Secretary Janet Yellen calls for a global minimum tax on businesses to “stop the race to the bottom”

The United States is working with the G20 nations on a global minimum tax for businesses, Treasury Secretary Janet Yellen said Monday. It is part of President Biden’s corporate tax plan that also includes increasing the corporate tax rate in the United States and establishing minimum taxes on foreign profits of American companies.

Yellen said that reaching an agreement would take the world away from what she called a 30-year career downward.

“Together we can use a global minimum tax to ensure that the global economy thrives on a more level playing field in the taxation of multinational corporations and spurs innovation, growth and prosperity,” Yellen said.

Yellen’s remarks came during a speech Monday to the Chicago Council on Global Affairs as the International Monetary Fund and the World Bank Group kick off a new round of spring meetings this week. This is Yellen’s first participation in the meetings as Secretary of the Treasury.

While the Biden administration is calling for a global minimum tax, a Treasury official did not give a specific number of what the target minimum is, only saying that the United States is looking to reach a comprehensive corporate tax deal with other major economies. The G20 aims to reach a political agreement by July.

The Treasury official acknowledged that some countries may not agree to an agreement, but argued that there are a number of provisions in the Made in America Tax Plan to help address tax havens and the United States is also working with important partners. The tax proposal is part of the president’s American Employment Plan, introduced last week, which would pay for infrastructure that includes roads, bridges and airports, but also affordable housing, broadband and other provisions. As part of his plan, the president is also calling for raising the minimum tax on US multinational corporations from 10.5% to 21%, which would be calculated on a country-by-country basis to help achieve profits in tax havens.

According to the Tax Foundation, the average corporate tax rate in 177 different jurisdictions in 2020 was just under 24%. The regional average was lowest in Europe, just under 20%, and highest in Africa, at 28.5%. With the Trump 2017 tax law, the US brought its corporate tax closer to the average, from 35% to 21%.

Yellen spent the past week briefing House and Senate leaders on Biden’s tax plan. According to the administration, the tax plan would raise more than cover the $ 2 trillion infrastructure plan payment over 15 years, in part by reversing some of the Trump administration’s tax cuts. Yellen will also report to House Democrats on Tuesday.

On Monday, Yellen also set other global cooperation priorities, such as addressing climate change, fighting inequality, working with partners to advance the global economic recovery from the pandemic, and making sure the world’s poorest countries have access to vaccines. and financing.

The Secretary of the Treasury said the Biden administration is committed to restoring US leadership to help strengthen the world economy and advance American interests, stating that the United States needs a strong presence in the global marketplace and would cooperate with willing partners. But she didn’t shy away from challenges, specifically China.

“Our economic relationship with China, like our broader relationship with China, will be competitive where it should be, collaborative where it can be, and adversarial where it needs to be,” Yellen said.

During Monday’s speech, Yellen highlighted the abrupt shift in focus from the previous administration on the world stage, saying that the United States is strongest when it relates to the world.

“For the past four years, we have seen firsthand what happens when the United States moves away from the global stage,” Yellen said. “America first should never mean America alone.”


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