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The U.S. is taking a two-pronged approach toward its goal of implementing a worldwide minimum tax for corporations as it progresses through negotiations with a global consortium, Treasury Secretary Janet Yellen said Tuesday. Getting countries around the world to implement a bottom level tax that all companies pay has been a goal the White House has set to stop firms from relocating their home operations to countries with cheaper rates.
A few countries have stated publicly that they endorse the global minimum tax idea, though it remains unpopular in some quarters. U.S. companies have long engaged in ''offshoring'' practices where they establish domiciles in low-tax countries, even though they conduct much of their business domestically. The Trump administration slashed the corporate tax rate to 21%, which President Joe Biden wants to raise to 28%. In addition, the 2017 tax cuts provided incentives for companies to repatriate profits they had stored overseas.
At an appearance earlier in the day, Yellen said the tax cuts did little to spur investment and instead sparked share buybacks and dividend issuance for investors. Yellen said the administration is looking for ways to discourage companies from deducting tax payments they make to tax-haven nations. Ultimately, she said companies will pay more taxes in the U.S., but she said the revenues are necessary to help fund the expansive spending programs on the administration's agenda.
Yellen says U.S. pushing to end global ''race to the bottom'' on corporate taxes, CNBC, May 5
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