Yellen says global minimum tax needed, too soon to declare victory over pandemic

U.S. Treasury Secretary Janet Yellen said on Monday that she is working with G20 countries to agree on a global corporate minimum tax rate to end a “30-year race to the bottom on corporate tax rates.” The global minimum tax is a key pillar of President Joe Biden’s $2 trillion infrastructure spending plan, which calls for an increase in the U.S. corporate tax rate to 28%.

Without a global minimum, the United States would again be at a disadvantage to a number of other major economies with lower tax rates, tax experts say, with U.S. commitment helping to jump start negotiations for a tax deal among a number of major economies.

Yellen, speaking to the Chicago Council on Global Affairs, said she also would use her participation in International Monetary Fund and World Bank annual meetings this week to advance discussions on climate change, improve vaccine access and encourage countries to support a strong global recovery.

The new Treasury chief said it was important to “end the pressures of tax competition” and make sure governments “have stable tax systems that raise sufficient revenues in essential public goods and respond to crises, and that all citizens fairly share the burden of financing government.”

The Biden plan proposes a 21% minimum corporate tax rate, coupled with eliminating exemptions on income from countries that do not enact a minimum tax. The administration says the plan will discourage the shifting of jobs and profits overseas.

Yellen says global minimum tax needed, too soon to declare victory over pandemic, Reuters, Apr 5