The United States is pushing in the G20 for agreement on a global minimum corporate tax to stem the erosion of government revenues, US Treasury Secretary Janet Yellen said Monday.
Just days after President Joe Biden announced plans to raise corporate taxes to finance a massive $2 trillion infrastructure and jobs program, Yellen said a collective international effort would end the “race to the bottom” on taxation.
“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,” she said in a prepared speech to The Chicago Council on Global Affairs.
The interconnected global economy has led to “a thirty-year race to the bottom on corporate tax rates.”
But for companies and economies to remain competitive, governments must make sure they “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.”
“President Biden’s proposals announced last week call for bold domestic action, including to raise the US 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,” Yellen said.
A Treasury official told reporters the G20 goal is to have a proposal by July, and the Biden administration could if needed change its legislation to bring the US minimum tax into line with the international plan.
Biden proposed raising the US corporate tax rate to 28 percent and the minimum for multinationals to 21 percent.
Yellen’s speech, ahead of the spring meetings of the International Monetary Fund and World Bank, as well as a meeting of G20 finance ministers, all virtual, also outlined the Biden administration push to resume the multilateral cooperation halted under former president Donald Trump.
“Over the last four years, we have seen firsthand what happens when America steps back from the global stage. America first must never mean America alone,” Yellen said.