US Treasury Secretary Janet Yellen surprised everyone when she called for the introduction of a global minimum corporate tax rate. Meanwhile, President Joe Biden, on the contrary, advocates for tax hikes.
"Competitiveness is about more than how US-headquartered companies fare against other companies in global merger and acquisition bids. 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 said in remarks to the Chicago Council on Global Affairs.
The Treasury Secretary reckons that this could stop "the race to the bottom" when corporations bargain with state governments worldwide choosing a more favourable interest rate. Currently, numerous countries are willing to relax their taxation regulations for certain companies in exchange for investments and corporate headquarters. As a result, many businesses, including US firms, strive to register their headquarters outside their home countries in order to save on taxes.
"We are working with G20 nations to agree to a global minimum corporate tax rate that can stop the race to the bottom."