Treasury Secretary Janet Yellen has called for an ambitious effort to end a global “race to the bottom” on corporate taxes. Such competition has eroded the revenues of governments which have racked up record levels of debt in the midst of the Covid-19 crisis. His approach marked a turnaround in the Trump administration and energized talks between about 140 countries on the issue.
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“It is imperative to work at the multilateral level to end the pressures of tax competition on corporations and the erosion of the corporate tax base,” the Treasury Department said in a statement on Thursday. “The Treasury stressed that 15% was a floor and that discussions should continue to be ambitious and push this rate higher.”
The offer, which came in talks this week, brings the United States closer to the 12.5% rate that was discussed at the OECD before the United States resumed negotiations after the election of Joe Biden as president.
Japanese Finance Minister Taro Aso, speaking to reporters in Tokyo, said the US proposal represented progress, although further discussions were needed. He said he expected a move towards global tax deals, including a digital tax, at the G-20 summer meeting, but final deals may not happen until later in the year. ‘year.
Some low-tax countries – like Ireland, with a 12.5% corporate rate – were skeptical of the 21% rate the Biden administration urged Congress to pass for global earned income by American companies.
UK officials are also concerned that the 21% rate will be too high in the long run – even though the UK intends to raise its corporate tax to 25% in 2023 to replenish public finances after the pandemic.
Thursday’s proposal comes ahead of a June 4-5 meeting of Group of Seven CFOs in London, which provides a forum for major industrial nations to forge consensus.
The Biden administration is also hoping to get a broad OECD agreement on a global minimum rate before Democrats take pressure in Congress to raise corporate taxes in the United States. The White House has proposed a national corporate tax rate of 28%, up from 21%, to help pay off Biden’s $ 4 trillion in longer-term economic programs.
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Republicans have opposed the Biden administration’s domestic and global tax efforts, which mark a brutal reversal of President Donald Trump’s policies. Moderate Democratic Senator Joe Manchin has called for a slight hike in corporate taxes.
“It is really important that Secretary Yellen does not give our tax base in these discussions,” Representative Kevin Brady of Texas, the top Republican on the House Ways and Means Committee, told reporters on Thursday. “I’m afraid she’s begging other countries to raise their tax rates because America is intentionally making itself uncompetitive.”
The US proposals also set a goal of getting the world’s 100 or so largest companies to pay more where they actually do business. Questions remain about the enforceability of such an initiative, the settlement of disputes and how the poorest economies could benefit from it.
Yellen’s approach has garnered a warmer reception from the major countries that stand to gain the most by capturing revenue from global companies operating in lucrative domestic markets. France was among those who approved the American measures. Other countries that make money hosting multinational companies have reservations.
According to the OECD, changes in the way tax rights are allocated could redistribute around $ 100 billion, while the minimum tax pillar, combined with existing US rules, would boost global government revenues up to to $ 100 billion a year.
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This notice was published: 2021-05-21 03:18:23