Yellen pushes global minimum corporate tax

Treasury Secretary Janet Yellen on Monday pushed for a global minimum corporate tax rate during her first major speech in her new role, as the Biden administration is seeking to enact an infrastructure plan financed by increasing taxes on corporations.

“Together we can use a global minimum tax to make sure the global economy thrives based on a more level playing field in the taxation of multinational corporations, and spurs innovation, growth, and prosperity,” Yellen said at a virtual event hosted by the Chicago Council on Global Affairs.

The speech comes at the start of the World Bank and International Monetary Fund’s spring meetings, which are being held virtually.

President Biden last week proposed a series of corporate tax changes that his administration says could raise more than $2 trillion over 15 years to pay for infrastructure investments. The plan would raise the U.S. corporate tax rate from 21 percent to 28 percent, raise a U.S. minimum tax on corporations’ foreign earnings to 21 percent, and take steps aimed at preventing companies from moving their headquarters and jobs overseas.

Critics of raising corporate taxes argue that doing so would make the U.S. business climate less competitive compared to other countries that have cut their corporate tax rates in recent years. 

Yellen said that the Biden administration wants to end a global “race-to-the-bottom” on corporate tax rates by working with other countries in the G20 on an agreement for a global minimum tax rate. She said that this effort is important in order to ensure that countries can raise the revenue they need to provide needed public services.

“Competitiveness is about more than how U.S.-headquartered companies fare against other companies in global merger and acquisition bids,” 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.”

A Treasury official said Monday that the G20 has set a goal to reach a political agreement on international tax issues by July and that the administration is still working toward that goal. The official acknowledged that some countries may not end up signing onto an agreement on a global minimum tax, but said that a number of Biden’s tax proposals are aimed at preventing U.S. companies from shifting their headquarters, assets and jobs to tax havens.