Treasury Secretary Janet Yellen will reportedly call for a global minimum corporate tax rate to prevent USA companies from relocating offshore in response to the Biden administration's forthcoming tax hikes, Axios reported on Monday.
On Monday, Ms Yellen backed a worldwide minimum corporate rate to create a "more level playing field in the taxation of multinational corporations" as the Biden administration plans to ramp up taxes on businesses.
Yellen, in her speech, criticized the strategy of President Donald Trump's administration, decrying four years when the U.S.
"America first must never mean America alone", she said in her first major speech on its overseas economic policy.
Biden proposed raising the United States corporate tax rate to 28% and the minimum for multinationals to 21%. Pillar 1 of the OECD's reform blueprint, which apportions global profits to the countries in which their customers are located, based on the principle that companies must pay tax in every market where they generate value and make profits, makes eminent sense.
The Liberal government's fall economic statement last November reiterated Canada's support for a new deal on global taxation, which has been the subject of discussion for years among members of the Organization for Economic Co-operation and Development.
Finance ministers of the G20 club of large economies are expected to discuss the proposal during a virtual meeting on Wednesday hosted by Italy. The update provided few details, but said this move could generate $3.4-billion in revenue over five years.
A White House summary of the Biden tax plan says the US minimum tax on USA corporations would be calculated "on a country-by-country basis so it hits profits in tax havens".
According to Yellen, one of the effect of an interconnected world has been a 30-year race to the bottom on corporate tax rates.
The claim was described as "questionable" in a report previous year by tax lawyer Jeffrey Trossman for the Canadian Tax Foundation.
The International Monetary Fund (IMF) and France's finance minister joined a chorus of support for the adoption of a global minimum corporate tax on Tuesday, saying an agreement on international taxation "is now within reach".
"The evidence does not support the assumption ... that higher headline [corporate income tax] rates will produce more corporate tax revenue for governments", the report stated. "It is a big concern of ours". White House Press Secretary Jen Psaki told reporters that the corporate tax rate being proposed is lower than it was in 2017. Olaf Scholz and Bruno Le Maire should now take up Yellen's proposal and push for a global minimum tax rate of 21 per cent.