Yellen’s remarks, reported earlier by Axios, are part of an attempt to prevent companies from seeking locations with lower taxes as the administration seeks higher levies on American companies to help pay for a $2.25 trillion infrastructure program.
“Competitiveness is about more than the U.S.-headquartered companies fare against other companies in global merger-and-acquisition bids,” Yellen will announce in a speech to the Chicago Council on Global Affairs. “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.”
Yellen will say the U.S. is operating with G-20 countries to find an appropriate minimum “that can stop the race to the bottom.” The U.S. is involved in talks headed by the Organization for Economic Cooperation and Development with roughly 140 nations to develop a global agreement on minimum levies, though participants haven’t yet reached a deal.
Biden has selected five Cabinet secretaries to explain — and sell — his plan to the American public, including Transportation Secretary Pete Buttigieg, Energy Secretary Jennifer Granholm, Housing and Urban Development Secretary Marcia Fudge, Labor Secretary Marty Walsh and Commerce Secretary Gina Raimondo.
Yellen’s job is to make the international case. Her speech further is composed to set the tone for the annual spring International Monetary Fund and World Bank meetings in Washington, which will begin virtually this week.
Biden’s plan, unveiled last week, includes increasing the corporate income tax rate to 28% from 21%. It was reduced from 35% under President Donald Trump. The Biden administration is further seeking a 21% global minimum tax, which would be an increase from the roughly 13% that corporations currently owe on offshore earnings.
Axios noted that by attempting to convince other nations to impose a global minimum tax, Yellen is recognizing the risks to the American economy if it acts alone in raising corporate rates.
“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 will say.