US Treasury Secretary Yellen calls for G20 agreement on global minimum tax

By Doug Connolly, MNE Tax

US Secretary of the Treasury Janet Yellen said on April 5 that she is working to get buy-in from G20 nations on a global minimum corporate tax to prevent international tax rate competition from eroding the corporate tax base and public revenues.

Yellen reiterated positions expressed by other Administration officials that there has been a global corporate tax “race to the bottom” and that competitiveness is about more than tax rates. The Trump administration in 2017 slashed corporate tax rates from 35% to 21% in a bid to boost US corporate competitiveness, which effectively halved the amount that US corporations paid in tax in 2018, according to a Joint Committee on Taxation report.  

The Secretary expressed the importance of preserving the tax base so that government can “invest in essential public goods and respond to crises” – nods to President Biden’s recently enacted $1.9 trillion Covid stimulus legislation and proposed $2 trillion infrastructure plan unveiled March 31. The infrastructure plan was coupled with a corporate tax plan that would increase the corporate tax rate to 28 percent and increase the US global minimum tax, enacted by the 2017 tax reform, to 21 percent.

Yellen’s remarks, delivered in an address to The Chicago Council on Global Affairs, were part of a broader message from her and the Biden Administration about increased US international engagement “where the challenges are global and no one country will be successful if it goes at it in isolation.”