On Monday, Treasury Secretary Janet Yellen argued in favor of a global minimum tax rate for corporations, regardless of their location, in an apparent bid to counter the impact of companies moving overseas in response to the Biden administration’s calls to increase corporation tax.
“Ms. Yellen, in a speech to the Chicago Council on Global Affairs, called for global coordination on an international tax rate that would apply to multinational corporations regardless of where they locate their headquarters,” The New York Times reported. “Such a global tax could help prevent the type of ‘race to the bottom’ that has been underway, Ms. Yellen said, referring to countries trying to outdo one another by lowering tax rates in order to attract business.”
This call for an international agreement comes as the Biden administration is looking to push through their latest legislative agenda — a massive $2 trillion infrastructure plan which President Joe Biden celebrated as the largest “investment in American jobs” since the second world war.
“The plan, which would be Biden’s second major legislative initiative, would allocate $621 billion for transportation-related infrastructure, $300 billion for drinking water-related infrastructure, broadband and electric grids, and $300 billion for affordable housing and upgrading schools, according to CNBC News. Furthermore, $400 billion would reportedly go toward care for elderly and disabled Americans, and $580 billion would be used for domestic manufacturing, job training, research and development,” reported The Daily Wire.
“Competitiveness is about more than how U.S.-headquartered companies fare against other companies in global merger and acquisition bids,” Ms. Yellen said. “It is about making sure that governments have stable tax systems that raise sufficient revenue to invest in essential public goods and respond to crises, and that all citizens fairly share the burden of financing government.”
Yellen also appeared to rebuke the supposed economic impacts of “America first,” saying that “Over the last four years, we have seen firsthand what happens when America steps back from the global stage,” and that “America first must never mean America alone.”
“The Organization for Economic Cooperation and Development, in coordination with the United States, has been working to develop a new international tax architecture that would include a global minimum tax rate for multinational corporations as part of its effort to curtail profit shifting and tax base erosion,” the Times reported. “Ms. Yellen said she is working with her counterparts in the Group of 20 advanced nations on changes to the global tax system that will help prevent businesses from shifting profits to low-tax jurisdictions.”
“President Biden’s proposals announced last week call for bold domestic action, including to raise the U.S. minimum tax rate, and renewed international engagement, recognizing that it is important to work with other countries to end the pressures of tax competition and corporate tax base erosion,” Ms. Yellen said. “We are working with G20 nations to agree to a global minimum corporate tax rate that can stop the race to the bottom.”