(Economic Policy Journal) Treasury Secretary Janet Yellen is working with her counterparts worldwide to forge an agreement on a global minimum tax on multinational corporations, reports The Washington Post.
Notes the Post:
The effort, which would involve a fraught and challenging global negotiation of tax laws, could prove one of Yellen’s biggest policy legacies if it succeeds. It also could prove central to Biden’s presidency…
A key source of new revenue probably will be corporate taxes, which President Donald Trump sharply cut in 2017. Although he has not proposed entirely reversing Trump’s cut in the corporate tax rate from 35 percent to 21 percent, Biden has said he would aim to raise potentially hundreds of billions more in revenue from big businesses.
In effect, a minimum corporate global tax would eliminate the ability of multinational corporations to shift income to countries that have the least onerous taxes. There would be no escape.
“A global minimum tax could stop the destructive global race to the bottom on corporate taxation and help discourage harmful profit-shifting,” Yellen told U.S. senators during her confirmation process.
Economist Joseph Stiglitz, another pro-tax advocate concurs with Yellen, “It’s a little like the Paris climate accord of taxes. Every country thinks it can steal business from others by lowering taxes, and the only beneficiary of that race to the bottom has been the richest multinational corporations.”
According to the Post, Yellen is working to curb the practice through an effort at the Organization for Economic Cooperation and Development in which more than 140 countries are participating.
The goal is for countries to agree in principle to a minimum corporate tax rate that would make it harder for multinational corporations to play countries off one another by threatening to leave.