Janet Yellen, U.S. Treasury Secretary, called on other countries to join Washington in setting a global minimum tax for businesses as she pledges to reaffirm U.S. leadership in international economic policy .
“Together, we can use a global minimum tax to ensure that the global economy thrives on a more level playing field in the taxation of multinational corporations, and drives innovation, growth and prosperity,” Yellen said in a speech to the Chicago Council on Global. Business Monday.
Yellen’s call on the eve of the spring IMF and World Bank meetings comes as the Biden administration places crackdown on tax evasion and tax shelters at the heart of its economic agenda.
Last week, the White House released a more than $ 2 billion investment plan to revamp decaying infrastructure and boost clean energy products. He hopes to pay the proposal with a higher corporate tax rate, an increase in its own global minimum tax and other measures designed to stop the shifting of profits across borders for fiscal reasons.
“Competitiveness is not all about how US-headquartered companies stack up against other companies in global M&A tenders,” Yellen said. “It’s about ensuring that governments have stable tax systems that generate enough revenue to invest in essential public goods and respond to crises, and that all citizens share the burden of funding government fairly.”
The US is already pushing for a multilateral digital tax deal at the OECD by the summer, but Yellen’s speech is for an even broader deal on business taxation encompassing the G20 and others country.
However, as Yellen pushes for a global deal on business taxation, the Biden administration faces a big battle over its proposals to increase corporate taxes in the United States, including a new provision. aiming to increase the global minimum corporate tax from 10.5% to 21%. Capitol Hill Republicans and business groups criticized the proposal as undermining the competitiveness of US multinationals.
In her speech, the former Federal Reserve Chairperson stressed that the United States wanted to restore its economic leadership in the world following the unilateralism of Donald Trump’s presidency and in the face of global challenges including the fight against pandemic and climate change.
“America First must never mean America alone. Because in today’s world, no country on its own can provide a strong and sustainable economy for its people. Over time, a lack of global leadership and commitment makes our institutions and our economy vulnerable, ”she said.
“The United States must have a strong presence in world markets on an equal footing. We will cooperate with partners willing to protect and enforce a rules-based order. “
However, she warned that the United States’ economic relationship with China was 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 confrontational where it needs to be.”
Yellen, who also served as chairman of the White House Council of Economic Advisers under Bill Clinton, expressed some regret over the way US economic policy had been conducted in the past.
“In the effort to grow our economies, we have neglected our environment. By embracing new technologies, we have not done enough to prepare our workers and our education systems for the changes taking place. While we have embraced trade as an engine of growth, we have neglected those who have not benefited from it, ”she said.
Despite the Fed’s projections that US gross domestic product growth could reach 6.5% this year, leading to a strong rebound from the pandemic, Yellen said it was “too early for advanced economies to declare. victory ”in the coronavirus crisis.
“I urge our partners to continue a strong fiscal effort and to avoid withdrawing their support too soon, to promote a strong recovery and to avoid the emergence of global imbalances,” Yellen said.
She dismissed concerns that the stimulus would trigger an unhealthy rise in inflation, saying the risks to the recovery were “asymmetric” and that there was more danger in doing too little.
“I think we have the fiscal space to act boldly. I think this is important in alleviating the suffering of the pandemic and the long-term adverse consequences on our potential production in the United States.