Treasury Secretary Janet L. Yellen will make the case on Monday for a global minimum tax as part of an effort to help raise revenue in the United States and prevent companies from shifting profits overseas to evade taxes.
Ms. Yellen, in a speech to the Chicago Council on Global Affairs, will call for global coordination on an international tax rate that would apply to multinational corporations, regardless of where they locate their headquarters. Her remarks come as the Biden administration and Democrats in Congress are looking for ways to pay for President Biden’s sweeping infrastructure plan to rebuild America’s roads, bridges, water systems and electric grid.
“Competitiveness is about more than how U.S.-headquartered companies fare against other companies in global merger and acquisition bids,” Ms. Yellen will say. “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.”
Ms. Yellen’s prepared remarks were reported earlier by Axios.
Corporate tax rates have been falling around the world in recent years. Under former President Donald J. Trump, the rate in the United States was cut from 35 percent to 21 percent. President Biden wants to raise that rate to 28 percent.
The Organization for Economic Cooperation and Development, in coordination with the United States, has been working to develop a new international tax architecture that would include a global minimum tax rate for multinational corporations as part of its effort to curtail profit shifting and tax base erosion.
Ms. Yellen plans to say that she is working with her counterparts in the Group of 20 advanced nations on changes to the global tax system that will end what she describes as a “race to the bottom.” The Biden administration also wants to increase the international minimum tax rate that American companies pay on their foreign profits to 21 percent.
Despite the increasingly precarious debt burden facing the United States, Ms. Yellen has argued that making such investments are crucial for creating more equity in the economy and putting it on a better trajectory for long term growth. Critics of the tax increases have warned that they will make the United States less attractive for business and raise the cost of domestic production.