Janet Yellen proposes “Global Minimum Corporate Tax” to discourage tax haven culture by corporations
Washington, April 6 2021: Following President Joe Biden’s announcement to raise corporate taxes to finance $2Trillion worth of infrastructure, US treasury secretary Janet Yellen has proposed a “global minimum corporate tax” to avoid depletion in government revenues. The US plans on pushing the G20 for the adoption of this scheme. The aim is to end the global “race to the bottom” on taxation.
Since assuming office, Biden has been a staunch critic of multinationals like Amazon who pay too little in taxes and vowed to put a stop to the practice of using tax havens.
He plans to raise the US corporate tax rate to 28 percent and the minimum for multinationals to 21 percent. Talking to reporters, he dismissed concerns the higher rate would drive companies overseas.
According to Yellen the current practices used by corporations is undermining government revenues and economic competitiveness. “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 speech to The Chicago Council on Global Affairs.
G20 finance ministers are expected to discuss the proposal during a virtual meeting this week, hosted by Italy. The G20 goal is to have a proposal on the global minimum tax by July.
According to World Bank President, David Malpass, “Taxes matter to development and it’s important that the world get it right,” but he declined to comment on the US proposal, which will be a topic for the G20 officials on Wednesday.
The plan is for the Biden administration push to resume the multilateral cooperation halted under former president Donald Trump.
Yellen said a strong US presence is necessary to ensure a level playing field in the global economy. She added, “Over time, a lack of global leadership and engagement makes our institutions and economy vulnerable.” The Biden administration already announced it is rejoining the Paris climate accords, and removed obstacles in the World Trade Organization that allowed the global body to name a new leader.
She stated Washington’s commitment to work with partners to “enforce a rules-based order.” In China’s case, she said their relationship “will be competitive where it should be, collaborative where it can be, and adversarial where it must be.”
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