April 5 (UPI) — Treasury Secretary Janet Yellen on Monday called for an end to global “tax competition,” which she said distorts the economic playing field and pressures governments to erode their own tax base.
Yellen made the comments in front of the Chicago Council of Global Affairs at a time when the Biden administration is contemplating raising corporate taxes to pay for an ambitious nationwide infrastructure plan.
While the plan will go to rebuild roads, bridges, water lines and electrical grid, some fear corporations will move their operations overseas to avoid the new taxes altogether. Yellen complained that some countries are participating in a “race to the bottom” in regard to their corporate tax rate.
“Competitiveness is about more than how U.S.-headquartered companies fare against other companies in global merger and acquisition bids,” Yellen said in prepared remarks. “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 the Biden administration is working with G20 nations to agree to a global minimum corporate tax rate “that can stop the race to the bottom.”
“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.
Yellen said the United States is set to take action on climate change, including rejoining the Paris climate accord, investing in sustainable infrastructure and creating new green jobs. She said other nations must make similar commitments.
“[Biden] has committed to releasing an ambitious strategy this year to outline U.S. domestic greenhouse gas targets that are consistent with our work internationally,” Yellen said. “Domestication must go hand in hand with U.S. international leadership, aimed at significantly enhancing global action.”