Treasury Secretary Janet Yellen on Monday will call for a minimum tax on businesses around the world in an effort to prevent companies from moving to find lower rates.
“We are working with G-20 nations to agree on a global minimum corporate tax rate that can stop the race to the bottom,” Yellen told the Chicago Global Affairs Council conference this morning, according to a Axios report confirmed by CNBC.
The statements come as President Joe Biden seeks to raise the corporate tax rate as a way to pay a $ 2 trillion infrastructure improvement plan.
According to the administration’s proposal, the corporate tax rate would rise to 28% from 21%. That increase would come just four years after former President Donald Trump cut the rate by 35 percent, which at the time was the highest in the world.
One of the reasons the Trump administration cut the corporate tax rate was the eruption of the relocation of U.S. companies or the relocation of their homes to countries with lower corporate tax rates, albeit large part of its operations took place nationwide.
Yellen will tell the conference that setting a global minimum corporate tariff will help provide stability and provide more equitable conditions for all countries.
“Competitiveness is more than the way U.S.-based companies behave relative to other companies in global merger and acquisition offerings,” Yellen will say, according to the Axios report. “It’s about making sure governments have stable tax systems that raise enough revenue to invest in essential public goods and respond to crises, and that all citizens fairly share the burden of government funding.”
Companies had also been encouraged to hide overseas income, which they also addressed Trump’s tax cuts by adding incentives for repatriation.
The Biden plan would require an increase in the offshore rate to 21% from 10.5%.