Treasury Secretary Janet Yellen on Monday will call for a minimum tax levy on corporations around the world in an effort to keep companies from relocating to find lower rates.
“We are working with G-20 nations to agree to a global minimum corporate tax rate that can stop the race to the bottom,” Yellen will tell a Chicago Council on Global Affairs conference this morning, according to a report from Axios that was confirmed by CNBC.
The remarks come as President Joe Biden looks to raise the corporate tax rate as a way to pay for a $2 trillion infrastructure improvement plan.
Under the administration’s proposal, the corporate tax rate would climb to 28% from 21%. That increase would come just four years after former President Donald Trump slashed the rate from 35%, which at that time was the highest in the world.
One reason the Trump administration cut the corporate rate was the rash of U.S. companies offshoring, or moving their domiciles to countries with lower corporate tax rates, even though much of their operations happened domestically.
Yellen will tell the conference that establishing a minimum global corporate rate will help bring stability and provide a more level playing field for all countries.
“Competitiveness is about more than how U.S.-headquartered companies fare against other companies in global merger and acquisition bids,” Yellen will say, according to the Axios report. “It is about making sure that governments have stable tax systems that raise sufficient revenue to invest in essential public goods and respond to crises, and that all citizens fairly share the burden of financing government.”
Companies also had been incentivized to hide revenues offshore, something the Trump tax cuts also addressed by adding repatriation incentives.
The Biden plan would call for an increase in the offshore rate to 21% from 10.5%.