U.S. Treasury Secretary Janet Yellen is seeking a minimum world corporate tax rate to prevent companies in the U.S. from shifting profits overseas to avoid paying tax.
Yellen called for an international minimum corporate tax rate.
"We're working with Group of 20 nations to agree to a global minimum corporate tax rate that can stop the race to the bottom," Yellen said during a speech to the Chicago Council on Global Affairs.
"Together, we can use global minimum tax to make sure that the global economy thrives, based on a more level playing field in the taxation of multinational corporations and spurs innovation, growth and prosperity."
She said competitiveness is more than how U.S.-headquartered companies fare against other companies in international merger and acquisition bids.
"It's 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.
President Joe Biden's American Jobs Plan will increase the minimum tax on U.S. corporations to 21%. The tax will be calculated on a country-by-country basis to deter companies from sheltering profits in international tax havens.
The plan will also increase the corporate income tax rate to 28% from 21%. The rate had been as high as 35% before former president Donald Trump and congressional Republicans cut taxes in 2017.
Yellen has previously called for a minimum corporate tax rate. During her confirmation hearing, she told the Senate she would work "with our allies on a global tax regime that protects American competitiveness while ensuring corporations pay their fair share."
Biden says he's "not at all" concerned a higher corporate tax rate will force some U.S. companies to relocate overseas. Yellen's proposed minimum rate is intended to prevent this from happening.
