[ad_1]
WASHINGTON (AP) – US Treasury Secretary Janet Yellen on Monday called for the passage of a global minimum corporate tax, an effort to at least partially offset any downside that could result from the administration’s proposed increase Biden of the US corporate tax rate.
Citing a “30-year race to the bottom” in which countries cut corporate tax rates in an attempt to attract multinational companies, Yellen said the Biden administration would work with other advanced economies in the world. Group of 20 to set a minimum.
“Competitiveness is not just about how US-headquartered companies stack up against other companies in global M&A tenders,” Yellen said in a virtual speech at the Chicago Council on Global Affairs. “It’s about making sure governments have stable tax systems that generate enough revenue to invest in essential public goods.”
The speech was Yellen’s most high-profile international affairs speech so far, and it came just as the spring meetings of the World Bank and the International Monetary Fund began in a virtual format.
“It is important to work with other countries to end the pressures of tax competition and the erosion of the corporate tax base,” Yellen said.
President Joe Biden has proposed raising the U.S. corporate tax rate to 28% from 21%, partially reversing the Trump administration’s 35% cut in its 2017 tax laws. Biden also wants to set a U.S. tax. minimum on corporate income abroad and make it more difficult for companies to transfer their profits abroad. Increase would help pay for White House’s ambitious $ 2.3 trillion infrastructure proposal.
Yellen’s remarks mainly serve to endorse negotiations that have been going on in the Organization for Economic Co-operation and Development (37 countries) for about two years, said Alan Auerbach, an economist at the University of California at Berkeley.
Biden’s US tax proposal includes an increase in the US minimum tax that was included in Trump’s tax law from 10.5% to 21%. One of the goals of the OECD talks is whether other countries will adopt similar minima. Biden’s tax measure would also penalize other countries without a minimum corporate tax by taxing their subsidiaries in the United States more heavily.
Auerbach said the OECD had helped promote other agreements on issues such as bank secrecy.
“There is a precedent for this sort of thing,” Auerbach said. “But that would be a big deal because it would cause countries to coordinate their tax systems like they never have before.”
Also on Monday, Biden said he was “not at all” concerned that a higher corporate tax rate would result in some U.S. companies being relocated overseas, although the minimum tax on Global Corporations proposed by Yellen aims to prevent this from happening.
“There’s no evidence for that … it’s weird,” Biden said in response to a question from reporters.
According to the Tax Foundation, a right-wing think tank, the Trump administration’s corporate tax cut has lowered the U.S. rate from the highest among OECD countries to the 13th highest. Many analysts have argued, however, that few large US multinationals have paid all of the tax.
“We have 51 or 52 Fortune 500 companies that haven’t paid a single penny a day for three years?” Biden said. “Come on.”
Senator Pat Toomey, R-Penn., Said Yellen’s proposal was unlikely to make much headway overseas. He also said Republicans would have to reverse any corporate tax hike if they regain a majority in Congress in the next election.
“Spoiler alert: This effort will likely fail and even if there is some sort of agreement it will not be binding because it is not a treaty,” Toomey said.
Yellen, meanwhile, downplayed the potential of the Biden administration’s national program, which also includes a $ 1.9 trillion COVID relief program approved last month, to spur higher inflation. Former Treasury Secretary Larry Summers, among others, has raised such concerns since the passage of the relief bill.
“I highly doubt this will cause inflationary pressures,” Yellen said, referring to the administration’s infrastructure proposal. “The problem, for a very long time, has been too low inflation, not too high inflation.”
Yellen also said the United States would step up efforts at home and abroad to tackle climate change, “after being on the sidelines for four years.”
The Treasury will work to “promote the flow of capital to climate-aligned investments and away from carbon-intensive investments,” Yellen said. This approach has raised the ire of GOP congressmen, who say it threatens the ability of the US oil and gas industry to access needed loans.
Yellen also noted that many developing countries are lagging behind in vaccinating their populations and have also suffered severe economic consequences from the pandemic. Up to 150 million people around the world will fall into extreme poverty this year, Yellen said.
“The result is likely to be a deeper and more lasting crisis, with growing debt problems, deeper rooted poverty and growing inequalities,” Yellen said.
The Biden administration supports the creation of $ 650 billion in new lending capacity at the IMF to address these issues, she said. Many Republicans in Congress oppose the new allocation, arguing that much of the funding would go to relatively better-off developing countries, like China.
Yellen acknowledged that the additional credit would be distributed to each IMF member, but argued that “significant resources will go to the poorest countries that need them most.” Nations can also donate some of their funds to the hardest-hit countries, which she expects many to do, she added.
[ad_2]
Source link