Janet Yellen, the US Treasury secretary, has called on other countries to join Washington in setting a global minimum tax for corporations as she vowed to reassert America’s leadership in international economic policy.
“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,” Yellen said in a speech to the Chicago Council on Global Affairs on Monday.
Yellen’s appeal on the eve of the spring meetings of the IMF and the World Bank comes as the Biden administration puts a crackdown on tax avoidance and tax shelters at the heart of its economic agenda.
Last week, the White House released a plan to invest more than $2tn to revamp decaying infrastructure and boost clean energy products. It hopes to pay for the proposal with a higher corporate tax rate, an increase in its own global minimum tax and other measures designed to stop profit-shifting across borders for tax reasons.
“Competitiveness is about more than how US-headquartered companies fare against other companies in global merger and acquisition bids,” Yellen said. “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.”
The US is already pushing for a multilateral agreement on digital taxation at the OECD by the summer, but Yellen’s pitch is for an even broader deal on corporate taxation encompassing the G20 and other countries.
In her speech, the former Federal Reserve chair stressed that the US was interested in restoring its economic leadership in the world in the wake of the unilateralism of Donald Trump’s presidency and in the face of global challenges including the fight against the pandemic and climate change.
“America first must never mean America alone. For in today’s world, no country alone can suitably provide a strong and sustainable economy for its people. Over time, a lack of global leadership and engagement makes our institutions and economy vulnerable,” she said.
“The United States needs to have a strong presence in global markets on a level playing field. We will to co-operate with willing partners to protect and enforce a rules-based order.”
However, she warned that US economic ties with China were more complex. “Our economic relationship with China, like our broader relationship with China, will be competitive where it should be, collaborative where it can be, and adversarial where it must be,” she said.