US is working with G20 Nations on a Global Minimum Tax

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On Monday, US Treasury Secretary Janet Yellen said the United States is working with G20 nations on a global minimum tax for companies. It is part of President Biden’s corporate tax plan that also includes increasing the corporate tax rate in the United States and setting minimum taxes on US companies’ foreign earnings. Yellen said reaching an agreement would move the world away from what she called a 30-year race to the bottom. She said, “Together we can use a global minimum tax to make sure the global economy thrives based on a more level playing field in the taxation of multinational corporations and spurs innovation, growth, and prosperity”. Her remarks came during a speech on Monday before the Chicago Council on Global Affairs.

The International Monetary Fund and World Bank Group kick off a new round of spring meetings this week. It is Yellen’s first participation as Treasury secretary in the meetings. Point to be noted that a Treasury official would not give a specific number for what the target minimum is, while the Biden administration is calling for a global minimum tax. President Biden said the US is looking to reach a comprehensive agreement on corporate taxation with other major economies. The G20 is looking to reach a political agreement by July. Yellen also said that some countries may not agree to a deal but argued there are a number of provisions in the Made in America Tax Plan to help address tax havens and the US working with major partners.

It is noteworthy that the tax proposal is part of the president’s American Jobs Plan, which would pay for infrastructure including roads, bridges, and airports but also affordable housing, broadband, and other provisions. President Biden is also calling for upping the minimum tax on US multinational corporations from 10.5% to 21%. The Treasury secretary also said the Biden administration is committed to restoring US leadership to help to make the world economy stronger and advance American interests. The United States wants a strong presence in the global market and would cooperate with willing partners. Yellen added, “Our economic relationship with China will be competitive where it should be, collaborative where it can be, and adversarial where it must be. Over the last four years, we have seen firsthand what happens when America steps back from the global stage”.