Author: NAOMI JAGODA
Source: The Hill
Treasury Secretary Janet Yellen is working with other countries on an agreement to update corporate tax rules to establish a global minimum tax as the Biden administration considers raising taxes on businesses in order to finance spending priorities.
The Washington Post reported Monday that the 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.
Yellen is participating in ongoing negotiations at the Organization for Economic Cooperation and Development (OECD) about how to update global tax rules to reflect the digital economy. One pillar of the group's work is focused on a nonbinding global minimum tax.
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 to 28 percent.
Republican lawmakers have raised concerns that such an increase could impact U.S. competitiveness and cause American companies to move overseas, since countries have generally been cutting their corporate tax rates in recent years. President Trump's 2017 tax law lowered the corporate tax rate from 35 percent to 21 percent.
Yellen has responded to concerns about increasing corporate taxes by expressing her desire for the OECD to reach an agreement. She said during her confirmation hearing in January that she wants to work with the OECD to prevent a "race to the bottom" on corporate taxation.
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In response to a written question following the hearing, Yellen said that "the Biden-Harris Administration will pursue a comprehensive multinational agreement to update global tax rules in ways that establish effective minimum taxation rules, prevent global profit-shifting, and ensure that corporations pay their fair share."
"We will pursue in a manner that will maintain competitiveness and diminish the incentives that American companies now have to offshore activities," she added.
The Post reported that it could be challenging for any OECD agreement on a global minimum tax to be implemented because of its nonbinding nature. The newspaper also reported that any agreement would likely need to be approved by Congress, which could be difficult depending on the specifics of the deal.