Treasury Secretary Janet Yellen has called for a global minimum corporate tax rate, according to the Wall Street Journal. Her calls focus on ensuring that governments have stable tax systems that raise sufficient revenue to invest in essential public goods and respond to crises.
Yellen’s remarks come when President Joe Biden’s proposal in the $2.3 trillion infrastructure plan has called for raising the corporate tax rate to 28% from 21%.
Biden’s infrastructure plan also includes a 21% minimum tax on U.S companies’ foreign income, removing an export incentive, and raising taxes on some foreign entities.
Yellen’s remarks also occur at a time finance ministers are prepared to gather virtually for semiannual meetings of the International Monetary Fund and World Bank this week.
If Biden’s plan is enacted without a global minimum tax, the U.S would be disadvantaged as foreign owned businesses operating overseas could be more profitable than competitors owned by U.S companies.
Analysts point that U.S’s stringent tax rules could reanimate inversions, transactions in which American companies take foreign addresses, often through mergers.
International cooperation would be crucial to Biden’s endeavor to fund the $2.3 trillion infrastructure proposal.
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