Yellen pledges USA worldwide cooperation, calls for global minimum tax

Paola Ditto
Aprile 6, 2021

Yellen's comments, reported earlier by Axios, are part of an effort to prevent companies from seeking locations with lower taxes as the administration seeks higher levies on American firms to help pay for a $2.25 trillion infrastructure program. "Together, we can use global minimum tax to make sure that the global economy thrives, based on a more level playing field in the taxation of multinational corporations and spurs innovation, growth and prosperity", Yellen said in a speech to the Chicago Council on Global Affairs.

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. However, she will reportedly argue that the tax rate minimum is for the main objective of ensuring those foreign countries have enough revenue to maintain their own governments. "It is about making sure that governments have stable tax systems that raise sufficient revenue to invest in essential public goods".

Separately, a U.S. Treasury official told reporters that it was important to have the world's major economies on board with a global minimum tax to make it effective, but did not say how many countries were needed for this.

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 and pledged that restoring U.S. multilateral leadership would strengthen the global economy and advance U.S. interests.

During Donald Trump's presidency, the business-minded Republican slashed the USA rate from 35% - a global high - to 21%, arguing the previous rate put American companies at a global disadvantage and resulted in many of them moving their businesses overseas.

According to the Tax Foundation, a conservative tax group, the worldwide average corporate tax rate is just under 24%. Apparently, in the face of pressure, Yellen will look for significant worldwide assistance.

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