Will There Be a Global Corporate Tax Rate?
Treasury Secretary Janet Yellen is working with G20 nations to establish a global minimum corporate tax rate.
The proposal is designed to keep American corporations from fleeing the country when President Joe Biden raises taxes to pay for his $2 trillion infrastructure plan. This is a stark departure from our former president, who incentivized companies to stay in the United States by lowering the corporate tax rate.
Biden’s infrastructure plan and tax proposal lack support from Republicans. So, Democrats are planning to use the budget reconciliation process to approve both with a simple majority vote.
“Competitiveness is about more than how US-headquartered companies fare against other companies in global merger and acquisition bids,” said Yellen during a speech to the Chicago Council on Global Affairs. A global minimum will “end the pressures of tax competition” and ensure that governments “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.”
Biden’s infrastructure plan calls for a 28% corporate tax rate within the United States. It also calls for a 21% minimum global corporate tax rate. But it is unclear how many countries he expects to persuade. Nations that refuse to implement the minimum corporate rate will no longer quality for exemptions on income.
The minimum rate for foreign profits from American companies will also increase from 10.5% to 21%.
Author’s Note: This is a dangerous idea that smacks of socialism. It will bring nothing but harm to the United States. On top of that, what business do we have dictating the corporate tax rate in other countries?