WASHINGTON – Treasury Secretary Janet Yellen defended a global minimum corporate tax rate on Monday, seeking international cooperation that is crucial to fund the government’s $ 2.3 trillion infrastructure proposal.
President Biden’s proposal to increase the corporate tax rate from 21% to 28% would push the United States from the middle of the pack among the major economies to the top. The Biden plan would also impose a minimum tax of 21% on the foreign income of American companies, remove an export incentive and increase taxes on the operations of some foreign companies in the United States.
If the United States raises its tax rates and imposes higher charges on the profits of American companies abroad, a global minimum tax would help prevent companies based in other countries from having a significant potential advantage. This coordination and the resulting tax revenue – not necessarily the objectives of companies based in the United States – occupy a prominent place in the government’s priorities.
“Competitiveness is more than how US-based companies do against other companies in global merger and acquisition proposals,” said Yellen in comments to the Chicago Global Affairs Council on Monday. “It is about ensuring that governments have stable tax systems that generate enough revenue to invest in essential public goods and respond to crises, and that all citizens share fairly the burden of financing the government.”
Ms. Yellen’s comments were made at a time when finance ministers were preparing to meet virtually for semiannual meetings of the International Monetary Fund and the World Bank this week.