US Treasury Secretary Janet Yellen on Monday called for a global minimum tax rate on corporations that would provide a more level playing field for all countries.
“We are working with G20 nations to agree to a global minimum corporate tax rate that can stop the race to the bottom,” Yellen said in prepared remarks for a virtual event hosted by the Chicago Council on Global Affairs, the Xinhua news agency reported.
“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, and spurs innovation, growth, and prosperity,” she said.
Yellen’s remarks came after US President Joe Biden last week proposed a series of corporate tax changes that could raise roughly $2 trillion over 15 years to pay for infrastructure investments in 8 years.
The Biden proposal would increase the US corporate income tax rate to 28 per cent, up from the current 21 per cent, attempting to partially reverse the tax cuts under the Donald Trump administration.
It would also raise the global minimum tax on US multinational corporations from 10.5 per cent to 21 per cent, in a bid to discourage offshoring and create incentives for investment in the US.
Yellen said that the Biden administration wants to end a “thirty-year race to the bottom” on corporate tax rates around the world.
“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,” she said.
Yellen also emphasized that global cooperation is needed to address global challenges such as the Covid-19 pandemic, technological change and climate change, as “no one country will be successful if it goes at it in isolation”.
“Over the last four years, we have seen firsthand what happens when America steps back from the global stage. America first must never mean America alone,” she said.
Yellen’s remarks also came as global financial and central bank officials begin to gather online this week for the spring meetings of the International Monetary Fund and the World Bank.
Yellen said that she would use the spring meetings to advance discussions on climate change, strengthen tools to improve vaccine access and financing for the world’s poorest countries, increase the focus on inequality and support a strong global economic recovery.