Treasury Secretary Janet Yellen is working with her counterparts around the world to forge an agreement over a global minimum tax on multinational corporations, as the White House looks for revenue to help pay for President Joe Biden’s domestic agenda. This effort could be one of Yellen’s biggest accomplishments if an agreement is reached and could be critical to any push from Biden to raise taxes to offset the cost of future spending proposals. The US was long an outlier, with a corporate tax rate of 35% versus the international average of 24%, until former President Donald Trump’s 2017 tax cut slashed the corporate rate to 21%. But even that hasn’t stopped other countries from lowering their rates to attract multinationals. The work comes as the Biden administration is looking at including tax increases in its next major legislative package, which could be an infrastructure bill. During Biden’s presidential campaign, he proposed increasing the U.S. corporate tax rate from 21 percent.
Nobel Prize-winning economist Joseph Stiglitz, a mentor of Yellen’s, told the Washington Post that if she is successful in these talks, it would be “a little like the Paris climate accord of taxes.” Yellen is holding talks with more than 140 international counterparts via the Organization for Economic Cooperation and Development (OECD), where countries are looking at global tax issues, with a particular focus on tech. The U.S. Chamber of Commerce says it supports a “multilateral” approach to the problem but is “extremely concerned” that the proposed rules would create additional complexity for multinational firms. Critics, including the Chamber, have expressed concern the agreement would also lead firms to face “double taxation” on some profits, meaning two countries would levy taxes on the same stream of income. If the complex measure is successful, it would be a huge accomplishment for both Yellen and Biden’s presidency — and maybe the world. It could also help pay for a $2 trillion infrastructure package.
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