Yellen hopes for global minimum corporate tax amid spending plan

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.

The $ 1.9 trillion stimulus signed into law last week was financed completely by additional federal borrowing. But the administration is expected to raise taxes at least partially to pay for its other big- ticket spending priorities, such as the massive infrastructure and jobs package being discussed by White House officials and congressional Democrats.

A key source of new revenue probably will be corporate taxes, which President Donald Trump sharply cut in 2017. Although he has not proposed entirely reversing Trump’s cut in the corporate tax rate from 35% to 21%, Biden has said he would aim to raise potentially hundreds of billions more in revenue from big businesses.

But some tax experts, business groups and Republican lawmakers say raising the rate could damage U. S. competitiveness. Countries around the globe have both recently and over the past several decades joined the U. S. in reducing tax rates to attract corporate investment. The average tax rate among countries is 24%, according to the Tax Foundation, a right- leaning think tank. Just last year, nine countries, including France, lowered their corporate tax rates.

Yellen is working to curb the practice through an effort at the Organization for Economic Cooperation and Development in which more than 140 countries are participating. The goal is for countries to agree in principle to a minimum corporate tax rate – although it would be nonbinding – that would make it harder for multinational corporations to play countries off each other by threatening to leave.

Yellen also told the Group of 20 nations in February the U. S. has dropped demands to allow firms to opt out of new global digital taxes – a move applauded by other European nations.