In her first speech as Treasury Secretary, Janet Yellen urged Congress to implement a global minimum corporate tax rate. Yellen says that President Joe Biden is eager to work with world leaders to crack down on tax havens and loopholes which has led several of America’s largest companies to pay no taxes in recent years.
“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,” said in her virtual address to the Chicago Council on Global Affairs.
Biden recently announced his plan to raise corporate income tax from 21% to 28% in his upcoming American Jobs Plan infrastructure bill. That raise, however, would not affect companies that incorporate themselves in foreign countries. Massive companies like Netflix and Amazon have paid $0 in taxes to the United States because they are incorporated in other countries. Yellen’s proposal is a first attempt at closing the loophole which allows such companies to collect income from Americans, have offices in America, and in the case of Amazon, host a majority of employees in the United States, but still pay no taxes.
“Competitiveness is about more than how U.S.-headquartered companies fare against other companies in global merger and acquisition bids,” Yellen said in her address. “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.”
