Treasury Secretary Janet Yellen is pushing her counterparts around the world to set a global minimum tax on multinational corporations, The Washington Post reports.
The push comes as the Biden administration presses forward toward raising the corporate tax rate after Donald Trump slashed the tax from 35% to 21% in 2017.
Biden has said he plans to bring in hundreds of billions in additional revenue from large corporations to finance spending programs.
Conservatives have argued that increasing the rate would damage the country’s competitiveness and ability to draw big business to its shores.
The average corporate tax rate around the world is 24%, according to the right-leaning Tax Foundation.
Many countries have been in a “race to bottom,” lowering the corporate tax. Nine countries decreased their corporate tax rates last year alone.
Paris accord for taxes:
Nobel-winning economist Joseph Stiglitz, one of Yellen’s mentors, described the plan as 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,” he told the Post.
Yellen is pushing the 140 nations in the Organization for Economic Cooperation and Development to set a minimum corporate tax rate, though any such measure would be nonbinding.
The hope is that a set playing field would make it more difficult for companies to “play countries off one another by threatening to leave,” the Post reported.
Yellen faces big haul:
It’s unclear whether Yellen would be able to accomplish her goal and doing so would be a heavy lift given the complicated tax codes in every different country.
Yellen has discussed the plan with her counterparts in Germany, France and other member states.
“A global minimum tax could stop the destructive global race to the bottom on corporate taxation and help discourage harmful profit-shifting,” Yellen testified during her confirmation hearing. “It’s necessary for U.S. companies to be globally competitive, and that’s why these OECD negotiations are so important.”