On Monday, U.S. Treasury Secretary Janet Yellen said that she is in the process of hashing out an agreement with G20 country on a global corporate tax rate.
The world need a minimum business tax rate to end a “30-year race to the bottom on corporate tax rates,” Yellen said, according to Reuters.
The global minimum corporate tax rate is a key plank of President Joe Biden’s $2 trillion dollar infrastructure plan. The plan mandates an increase in the U.S. corporate tax rate from 21 percent to 28 percent.
Raising the federal corporate tax rate to 28 percent would put the American economy at a disadvantage compared to most other major world economies, tax experts believe.
She said that it was essential to “end the pressures of tax competition.” Governments need to have “stable tax systems that raise sufficient revenues in essential public goods and respond to crises, and that all citizens fairly share the burden of financing government,” she stated.
Yellen made the comments in a speech to the Chicago Council on Global Affairs.
The treasure secretary, in a separate statement, told reporters that she felt it was important for the tax to be “effective” to pave the way to a global deal where the largest economies in the world would agree on a global minimum corporate tax.
She added that the American government would enact tax legislation to ban companies from sending profits overseas or moving offices to tax havens to avoid paying taxes. The U.S. will pressure other nations to enact similar laws.