Janet Yellen calls for global minimum corporate tax

US Treasury Secretary Janet Yellen has called on other countries to work with Washington to establish a global minimum corporate tax rate, as she has promised to reaffirm America’s leadership in international economic policy.

“Together, we can use a global minimum tax to ensure that the world economy thrives on a more equal playing field in the taxation of multinational corporations, and this stimulates innovation, growth and prosperity,” Yellen said in a speech to the Chicago Council on Global said. Business Monday.

Yellen’s call on the eve of the spring meetings of the IMF and the World Bank comes as the Biden government places a fight against tax evasion and tax havens at the heart of its economic agenda.

The White House last week announced a plan to invest more than $ 2 tons to renovate dilapidated infrastructure and promote clean energy products. He hopes to pay for the proposal with a higher corporate tax rate, an increase in his own global minimum tax and other measures to stop profit shifting across borders for tax reasons.

“Competitiveness is about more than the way U.S. headquarters fare against other companies in global merger and acquisition offerings,” Yellen said. “It is about making sure that governments have stable tax systems that generate sufficient revenue to invest in essential public goods and respond to crises, and that all citizens share the burden of government funding fairly.”

If I do not vote for it, it is going nowhere. We will therefore be utilized here

The US is already campaigning by the summer for a multilateral digital tax treaty at the OECD, but Yellen’s intention is to cover an even broader corporate tax treaty that includes the G20 and other countries.

However, while Yellen is pushing for a global corporate tax deal, the Biden government is facing a major battle over its proposals for higher US corporate taxes, including a new provision for the global minimum corporate tax rate of 10.5 percent to 21 percent. Republicans on Capitol Hill and business groups said such tax increases would hurt the competitiveness of U.S. multinational corporations.

Pat Toomey, the Republican senator from Pennsylvania, said: ‘Secretary Yellen has essentially acknowledged that increasing the company’s tax increases in Biden will make American workers and businesses less competitive. This is why Secretary Yellen calls on other developed countries to punish their workers and businesses with their own tax increases. ”

Joe Manchin, the centrist Democratic senator from West Virginia, who is a crucial vote in the upper chamber, also suggested that Biden’s plan for corporate taxation was too aggressive, saying that he only increased the U.S. rate from 21 percent to 25 percent. would increase, and that other changes would change. was needed. The Biden plan is an increase to 28 percent.

“If I’m not voting for it, it’s not going anywhere. So we’ll have some leverage here, ‘Manchin told a local radio station.

In her speech, Yellen stressed that the US is interested in restoring its economic leadership in the world following the one-sidedness of Donald Trump’s presidency and in the face of global challenges, including the fight against the coronavirus pandemic and climate change.

“America should never even mean America alone. Because in today’s world, no country alone can provide a strong and sustainable economy for its people. Over time, a lack of global leadership and involvement makes our institutions and economy vulnerable, ‘she said.

“The United States must be strongly present in world markets on an equal footing. We will work with willing partners to protect and enforce a rule-based order. ”

However, the former chairman of the Federal Reserve has warned that US economic ties with China are more complicated. “Our economic relationship with China, like our broader relationship with China, will be competitive where it needs to be, cooperative where it can be, and opposites where it needs to be.”

Yellen, who also served as chairman of the White House Board of Economic Advisers under Bill Clinton, expressed some regret over how US economic policy has been conducted in the past.

‘In the pressure to grow our economies, we have neglected our environment. As we have adopted new technologies, we have not done enough to prepare our workers and our education systems for the changes. While we adopted the trade as a vehicle for growth, we neglected those who did not benefit from it, ‘she said.

Despite predictions by the Fed that growth in U.S. gross domestic product could reach 6.5 percent this year, which would make a strong setback from the pandemic, Yellen said it was “too early for advanced economies to win” in the coronavirus crisis.

“I call on our partners to continue a strong fiscal effort and not withdraw support too soon, to promote strong recovery and avoid the emergence of global imbalances,” Yellen said.

She also said the slow pace of vaccinations in many developing countries would lead to a “deeper and longer lasting crisis, with increasing debt problems, more entrenched poverty and growing inequality”.

Yellen dismissed concerns that the stimulus would cause an unhealthy inflation jump, saying the risks to recovery were ‘asymmetric’ and that there was more danger of doing too little.

“I do believe that we have the fiscal space to act with confidence. I think it’s important to alleviate the suffering of the pandemic, and the long-term negative consequences for our US potential production. ”