Treasury Secretary Janet Yellen will ask corporations around the world for a minimum tax on Monday in an effort to prevent companies from relocating to find lower rates.
“We are working with the G-20 nations to agree on a global minimum corporate tax rate that can stop the race to the bottom,” Yellen said at a Chicago Global Affairs Council conference this morning, according to an Axios report that was confirmed. by CNBC.
The comments come as President Joe Biden seeks to increase the corporate tax rate as a way to pay for a $ 2 trillion infrastructure improvement plan.
According to the administration’s proposal, the corporate tax rate would rise from 21% to 28%. That increase would come just four years after former President Donald Trump slashed the 35% rate, which at the time was the highest in the world.
One of the reasons the Trump administration lowered the corporate rate was the wave of US companies relocating or relocating their homes to countries with lower corporate tax rates, despite the fact that much of their operations were conducted domestically.
Yellen will tell the conference that setting a minimum global corporate rate will help bring stability and provide a more level playing field for all countries.
“Competitiveness is more than how US-based companies perform vis-à-vis other companies in global M&A bids,” Yellen will say, according to an Axios report. “It’s about making sure governments have stable tax systems that generate enough revenue to invest in essential public goods and respond to crises, and that all citizens fairly share the burden of financing the government.”
Businesses had also been incentivized to hide income abroad, something Trump’s tax cuts also addressed by adding incentives to repatriation.
The Biden plan would require an increase in the offshore rate from 10.5% to 21%.