WASHINGTON (AP) – US Treasury Secretary Janet Yellen called on Monday for a minimum global corporate income tax, an attempt to offset any shortcomings that could arise from the Biden administration’s proposed increase in US corporate tax.
Citing a “30-year race to the bottom” in which countries have reduced corporate taxes in a bid to attract multinational businesses, Yelen said the Biden administration would work with other advanced economies in the Group of 20 to set a minimum.
“Competitiveness is more than how US-based companies deal with other companies in global mergers and acquisitions,”
The speech was Jelena’s most famous in international relations so far and came just as the spring meetings of the World Bank and the International Monetary Fund began in a virtual format.
“It is important to work with other countries to end the pressure on tax competition and corporate tax erosion,” Yelen said.
Senator Pat Toomey, R-Penn., Said Yellen’s proposal is unlikely to make much progress abroad. He also said Republicans must reverse any corporate tax increases if they regain a congressional majority in the upcoming election.
“Spoiler warning: This effort is likely to fail and even if there is an agreement, it will be non-binding because it is not a contract,” Toomi said.
President Joe Biden has proposed raising the U.S. corporate tax rate to 28 percent from 21 percent, partially repealing the Trump administration’s 35 percent cut in its 2017 tax legislation. Biden also wants to set a minimum U.S. corporate income tax abroad. make it difficult for companies to divert their profits to offshore companies. The increase will help pay for the White House’s ambitious $ 2.3 trillion infrastructure proposal.
Also Monday, Biden said he was “not at all concerned that a higher corporate tax rate would force some US companies to move abroad, although Yelen’s proposed global minimum corporate tax is intended to prevent this.”
“There’s no evidence of that … that’s weird,” Biden said when asked by reporters.
According to the right-leaning tax foundation, the Trump administration’s corporate tax cut has lowered the U.S. rate from the highest of the Organization for Economic Co-operation and Development’s 37 advanced economies to the 13th highest. However, many analysts say that few large US multinationals have paid the full tax.
“We have 51 or 52 Fortune 500 corporations that haven’t paid a dime a day in three years?” Biden said. “Come on.”
Yellen, meanwhile, has downplayed the potential of the Biden administration’s domestic agenda, which also includes a $ 1.9 trillion COVID aid package approved last month, to spur higher inflation. Former Treasury Secretary Larry Summers, among others, has expressed similar concerns about the passage of the relief bill.
“I strongly doubt that this will cause inflationary pressures,” Yelen said, referring to the administration’s infrastructure proposal. “The problem for a very long time is inflation that is too low, not inflation that is too high.”
Yellen also said the United States would step up its efforts at home and abroad to combat climate change “after sitting on the sidelines for four years.”
The Treasury will work to “promote capital inflows to climate-friendly investments and away from carbon-intensive investments,” Yellen said. This approach has angered members of the GP Congress, who say they threaten the ability of the US oil and gas industry to gain access to the necessary credit.
Yellen also noted that many developing countries are lagging behind in vaccinating their populations and have also suffered severe economic consequences from the pandemic. Up to 150 million people worldwide will be in extreme poverty this year, Yellen said.
“The result is likely to be a deeper and longer-lasting crisis with growing debt problems, more established poverty and growing inequality,” Yellen said.
The Biden administration supports the creation of $ 650 billion in new IMF lending capacity to deal with such problems, she said. Many Republicans in Congress oppose the new distribution, arguing that much of the funding will go to relatively better developing countries, such as China.
Yellen acknowledged that the additional loan would be distributed to each member of the IMF, but said “significant resources will go to the poorest countries in greatest need.” Nations can also donate some of their money to the most affected countries, which she expects to do a lot, she added.