Janet Yellen proposes global minimum corporate tax


United States Treasury Secretary Janet Yellen has argued for a global minimum corporate tax rate.

Wall Street Journal reported that President Biden’s proposal to raise the corporate tax rate to 28 per cent from 21 per cent would push the US from the middle of the pack among major economies to near the top.

The Biden plan would also impose a minimum 21 per cent tax on US companies’ foreign income, remove an export incentive and raise taxes on some foreign companies’ US operations.

WSJ said if the US raises its tax rates and imposes higher burdens on US companies’ foreign profits, a global minimum tax would help prevent companies based in other countries from having a significant potential advantage.

That coordination and the ensuing tax revenue—not necessarily the aims of US-based companies—rank high on the administration’s priorities.

“Competitiveness is about more than how US-headquartered companies fare against other companies in global merger and acquisition bids,” Yellen said in remarks to the Chicago Council on Global Affairs on Monday.

“It is about making sure that governments have stable tax systems that raise sufficient revenue to invest in essential public goods and respond to crises, and that all citizens fairly share the burden of financing government”, WSJ reported.

Yellen’s remarks came as Finance Ministers prepared to gather virtually for semi-annual meetings of the International Monetary Fund and World Bank this week.

Speaking to reporters in Washington, Biden took aim at around 50 corporations on the Fortune 500 list that paid no taxes at all for three years, saying it was time for them to pay their share.

When asked if raising the corporate tax rate to 28 per cent from 21 per cent would drive away corporations, Biden said: “Not at all… there’s no evidence of that.”