YELLEN RENEWS CALL FOR GLOBAL MINIMUM CORPORATE TAX

Treasury Secretary Janet Yellen outlined the case for a harmonized corporate tax rate across the world’s major economies, part of an effort to restore global leadership and credibility with US allies following the unilateralist approach of the Trump era, Saleh Mohsin and Christopher Condon reported for Bloomberg News.

In her first major speech on international economic policy, Yellen marked an American return to the “global stage.” She singled out China, saying the US needs a “strong presence in global markets” to level the playing field.

The Biden administration tax proposal also marks a US return to years-long talks -- led by the Organization for Economic Cooperation and Development (OECD) with about 140 countries -- to develop a global agreement on minimum levies.

But participants haven’t yet reached a deal, and while most involved support the idea of a global minimum tax, the negotiations also include a potential accord on digital taxation that has been blocked by long-standing disagreements over how to approach the issue.

“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,” Yellen said in her virtual remarks to the Chicago Council on Global Affairs.

The new multilateral approach begins with the US taking a leading role in working globally to find an appropriate minimum corporate tax, one of the revenue-raising proposals in President Joe Biden’s $2.25 trillion package of infrastructure and other spending released last week. Yellen wants to halt what she described as an international “race to the bottom” by countries competing to lure corporations with lower taxes.

Yellen’s predecessor, Steven Mnuchin, walked away from the OECD talks because he wanted America’s system to qualify as the minimum tax. With the change in White House control in November’s election, Yellen has been laying the groundwork for the minimum-tax proposal since shortly after taking office in late January, when she used her first bilateral talks with counterparts to discuss tax negotiations with France, Germany and the UK.

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