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Janet Yellen will use her first major address as Treasury secretary to argue for a global minimum corporate tax rate, Axios has learned, as she makes the case for President Biden’s plan to raise U.S. corporate taxes to fund his $2 trillion+ infrastructure plan.

Why it matters: Convincing other countries to impose a global minimum tax would reduce the likelihood of companies relocating offshore, as Biden seeks to increase the corporate rate from 21% to 28%.

• “Competitiveness is about more than how U.S.-headquartered companies fare against other companies in global merger and acquisition bids,” Yellen will say today in a speech to the Chicago Council on Global Affairs, according to an excerpt of her prepared remarks obtained by Axios.
• "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."
• "We are working with G20 nations to agree to a global minimum corporate tax rate that can stop the race to the bottom."

The big picture: President Trump lowered the U.S. rate from 35% to 21%, arguing that U.S. companies were at a global disadvantage and were being incentivized to relocate offshore.

• The average corporate rate in the G7 is 24%, with some nine countries recently lowering their corporate rate, according to the Tax Foundation, a conservative tax group.
• Biden’s plan would also raise the international minimum rate for foreign profits from U.S. companies from 10.5% to 21%, which would still be lower than the 28% domestic corporate rate.

Driving the news: Biden has tapped five Cabinet secretaries to explain — and sell — his plan to the American public, including Transportation Secretary Pete Buttigieg, Energy Secretary Jennifer Granholm, Housing and Urban Development Secretary Marcia Fudge, Labor Secretary Marty Walsh and Commerce Secretary Gina Raimondo.

• Yellen’s task is to make the international case. Her speech also is designed to set the tone for the annual spring International Monetary Fund and World Bank meetings in Washington, which will begin virtually this week.

Between the lines: Biden has been relying on Yellen to convince the business community and reassure Wall Street that his $2 trillion+ infrastructure proposal, on top of his $1.9 trillion stimulus package, won’t lead to inflation.

• Now he’s deploying her to convince international finance ministers and central bankers that the world’s biggest economies need to act in concert on corporate rates to avoid a race to the bottom.

Go deeper: Yellen will also challenge the world’s economic powers to focus on climate change and on ways to improve vaccine access for the world’s poorest countries.

• She will call for $650 billion in new “Special Drawing Rights” — essentially lines of credit at the IMF that can help developing countries access more U.S. dollars.
• The Trump administration was skeptical of new SDR allocations and many congressional Republicans are still opposed.

The bottom line: By trying to convince other countries to impose a global minimum tax, Yellen is acknowledging the risks to the American economy if it acts alone in raising corporate rates.

• “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,” she will say.

https://www.axios.com/janet-yellen-global-minimum-tax-rate-51c7395b-e46a-4a5c-b18b-bdcf5d8bd352.html

In preparation for the Biden's administration planned hike of the US corporate tax from 21% to 28%. Janet Yellen will propose G20 nations coordinate to legislate a global corporate tax rate to prevent amazon and others from moving operations from the USA to other nations with lower corporate taxes.

I am sure Biden will not approve of such move if he is intelligent enough.

Now if the US government calls for a unified corporate tax rate across the world and if all countries agree to do that, that will be the end of industrialization in US. Every company then inevitably, move to the developing countries like India, China, Philippines or even South Africa because they can enjoy cheap labor (1/4th or even 1/5th of US) and same corporate tax.

Many nations could stand to lose significantly if they were forced to raise corporate taxes. Low corporate taxes are how some countries attract business and residents to invest in their regions. Would they be willing to part with some of their key economic and financial advantages simply for the sake of punishing US corporations like amazon with higher taxes?

There is a question of whether countries like puerto rico would support a planned global corporate tax.

It does make sense, but not in the way that Yellen envisions it.

It is the US and other advanced economies who needs to lower their corporate tax rates in order to converge with the rest of the world. Their cost of doing business is simply too high for any major startups to launch there. Unfortunately the pool of talent in the U.S. means that they can get away with charging these high corporate tax rates, but I suspect not for long until major firms start moving offshore too (already happened with a bunch of them).

Instead of blaming the competition, how about reflecting internally for once and adjusting your policy accordingly?

getting g20 countries to apply a unified corporation tax rate wont change anything
the companies will just have a HQ in one of the other 170 countries
yes they will operate in america and G20 countries but run them as franchises where their 'profit' gets transported to the non G20 countries as 'management fee's'.. thus have no 'profit' within the G20 and thus no corporation tax to pay

You can not call for a global unified corporate tax rate when you are not fully aware of the economic state of other countries,  there are many countries who's economic are in a bad state and needs the support of advanced countries like the USA for continuous survival, how do you tell such countries to increase tax rate from 21% to 28%, maybe with the 21% tax most companies already producing at loss, some must have fold up and seek better alternatives elsewhere,
I don't see many countries accepting this call, otherwise that will mean a deliberate economic self destruction. The earlier they forfeit this ridiculous idea the better for everyone.

You can not call for a global unified corporate tax rate when you are not fully aware of the economic state of other countries,  there are many countries who's economic are in a bad state and needs the support of advanced countries

You can not call for a global unified corporate tax rate when you are not fully aware of the economic state of other countries,  there are many countries who's economic are in a bad state and needs the support of advanced countries like the USA for continuous survival, how do you tell such countries to increase tax rate from 21% to 28%, maybe with the 21% tax most companies already producing at loss, some must have fold up and seek better alternatives elsewhere,
I don't see many countries accepting this call, otherwise that will mean a deliberate economic self destruction. The earlier they forfeit this ridiculous idea the better for everyone.

In preparation for the Biden's administration planned hike of the US corporate tax from 21% to 28%. Janet Yellen will propose G20 nations coordinate to legislate a global corporate tax rate to prevent amazon and others from moving operations from the USA to other nations with lower corporate taxes.

This conflict is a macrocosm of current events. Where Elon Musk and tesla fled high taxation california for low taxation texas. States like new york and california have hemorrhaged a steady outflux of residents and business to states with lower taxes like florida over the last few years.

There is a question of whether countries like puerto rico would support a planned global corporate tax. Many nations could stand to lose significantly if they were forced to raise corporate taxes. Low corporate taxes are how some countries attract business and residents to invest in their regions. Would they be willing to part with some of their key economic and financial advantages simply for the sake of punishing US corporations like amazon with higher taxes?

I don't think even Janet Yellen herself is sure that other countries will support her call. It's just that campaign promises were made to raise corporate taxes if a representative of the Democratic Party wins, and now it's time to show the voters that the work on fulfilling the promises is underway. ;) There is information that the proposed increase in the tax rate can be withdrawn from individual states, which with their reduced rates would not mind attracting corporations to their territory.

Trump is a very weird person and made some bad decisions, but here we see how much good he made reducing taxes...

I think any "unified global tax rate"  would be terrible, and specially good for China. They will not follow those rules and will get benefits from it.

Those global pacts usually also hurt the sovereignty of the countries, which won't be able to attract companies when they need to create more jobs, neither get more money from taxes when they need...

My 2 cents, I think the less rules, the better. Governments world wide already make so many rules, we don't need a "central government" with more rules to all of them.

I don't know what sort of people vote for a party that promises to increase the taxes.

Those who think that the taxes are going to be paid by the rich, when in reality the middle and working classes bear the brunt of the tax burden. Yelen must be desperate. She knows that tax hikes often result in lower revenues, which is why she is making this move. Basically, what they want to do is to continue squandering money and not have any consequences, but they cannot.

Trump is a very weird person and made some bad decisions, but here we see how much good he made reducing taxes...

I think any "unified global tax rate"  would be terrible, and specially good for China. They will not follow those rules and will get benefits from it.

Those global pacts usually also hurt the sovereignty of the countries, which won't be able to attract companies when they need to create more jobs, neither get more money from taxes when they need...

My 2 cents, I think the less rules, the better. Governments world wide already make so many rules, we don't need a "central government" with more rules to all of them.

I also see that, some of Biden's policies seem too hasty without visionary thinking.  To be honest about this tax, it will definitely be burdensome for many entrepreneurs in the USA and good news for its rival countries.  As long as Trump became president he continued to carry out policies until a trade war broke out.  China is the country that has benefited the most from this.  The Chinese businessmen are subsidized by the government, while the USA instead burdens them with taxes.  In the midst of this pandemic, not many relaxation policies for financial ones have been exacerbated by Biden's policy in the name of building infrastructure.  Is this what all the people expect from the elected president?

This is exactly why the white working class voted en masse for Trump, despite his immaturity with some of the issues. They understood that Biden as the president could destroy their jobs. And Biden and his team has not disappointed us. As soon as he took charge as the POTUS, he started increasing taxes. The Republicans are facing a big dilemma now. In the states ruled by them, they have decreased the taxes and thereby created lot of new jobs. I am talking about states such as Texas, Georgia and Florida. But this job creation in turn attracts the jobless Democrat supporters from broke states such as California and New York, and eventually makes these states Democrat leaning. This is exactly what happened in states such as Arizona and Georgia during the 2020 elections.

Sharing Profits. The OECD's overall goal is to create a unified global corporate tax system whereby multinational businesses are taxed where profits are earned, regardless of physical presence. Combined, Pillar 1 and Pillar 2 are expected to raise an additional 4%, about $100 billion, in corporate tax dollars globally

Completely agreed. Janet Yellen seems to have lost her mental balance and that may be the reason why she is making such absurd statements. Take this - the American government increases the corporate tax in their jurisdiction from 21% to 28% and then orders the other countries to do the same. What do they think they are? The days of colonialism are over, and the other countries don't need to listen to deranged people like Yellen. If the regime is worried that more and more companies may move abroad due to high taxes, then they need to decrease them. On the other hand they have gone for a tax increase when the companies are getting whacked by the pandemic and the biggest tax evader (Jeff Bezos) is supporting the move.

This is exactly why the white working class voted en masse for Trump, despite his immaturity with some of the issues. They understood that Biden as the president could destroy their jobs. And Biden and his team has not disappointed us. As soon as he took charge as the POTUS, he started increasing taxes. The Republicans are facing a big dilemma now. In the states ruled by them, they have decreased the taxes and thereby created lot of new jobs. I am talking about states such as Texas, Georgia and Florida. But this job creation in turn attracts the jobless Democrat supporters from broke states such as California and New York, and eventually makes these states Democrat leaning. This is exactly what happened in states such as Arizona and Georgia during the 2020 elections.

Joseph Robinette Biden Jr. (/ˈbaɪdən/ BY-dən; born November 20, 1942) is an American politician who is the 46th and current president of the United States. A member of the Democratic Party, he served as the 47th vice president from 2009 to 2017 under Barack Obama and represented Delaware in the United States Senate from 1973 to 2009.

White people always vote republican, and they didn't vote for Trump last election cycle. He lost white suburban moms because his twitter use was unstable. I don't think many people were worried about tax increases when they shifted their vote from Trump to Biden. All they wanted was normalcy, aka a guy without a compulsive twitter addiction.

So the choice was between a president who is not liked by the social media and in favor of low taxes, and someone who is the darling of social media and in favor of high taxes. The American voters made their choice and I congratulate them. I hope they are now happy with the tweets that are coming out of the official POTUS handle. Obviously that is a higher priority when compared to taxes, employment and economic growth.

White people always vote republican, and they didn't vote for Trump last election cycle. He lost white suburban moms because his twitter use was unstable. I don't think many people were worried about tax increases when they shifted their vote from Trump to Biden. All they wanted was normalcy, aka a guy without a compulsive twitter addiction.

So we're back to the "Republicans are always good for the economy" trope?  If it isn't already absurd enough that nations chase perpetual economic growth, surely it's even more absurd when they think they can achieve that by cutting their way to growth?  I'll never understand republicans/conservatives.  They don't want to pay for public services, but they still expect them to not only function, but function well.  It's truly baffling.   

I am not an American, but still I would say that Republicans are much better for the economy than the Democrats. How can you claim that Democrats are in favor of economic growth, when they are increasing taxes left, right and the center? All they have done ever since they came to power is to distribute some $400 billion in cash mostly to individuals who don't need them and to spend another $1.5 trillion to failed cities and unions. If this is your idea for economic growth, then I would disagree. Public services were fully functioning when Trump was the president, and for that he didn't raised the tax levels.

Those who think that the taxes are going to be paid by the rich, when in reality the middle and working classes bear the brunt of the tax burden. Yelen must be desperate. She knows that tax hikes often result in lower revenues, which is why she is making this move. Basically, what they want to do is to continue squandering money and not have any consequences, but they cannot.

You do not have to be republican, all you have to be is a person who hates left and you would be supporting republicans in USA, that's all it takes. How do I know you are a person who hates leftists in anywhere in the world? Simple, you say that Democrats are increasing taxes left right and center, whereas they have not increased taxes yet and only proposition was to increase taxes on people who earn over 10 million dollars a year.

Do you think that's bad? In a world where economy is horrible because of pandemic, increasing taxes for people who profit more than 10 million dollars should not pay a bit more taxes?

Any person who sees "tax increase" and think that leftists are ruining economy are the reason why we do not have a proper world. We have 300+ million people who are making under 200k dollars a year, and over half of that makes less than 70k per year, and all we need is people with 10+ million profits per year to pay a bit more taxes so we can make the world better place for everyone, why is that so bad?

At 400K in the US you're in the top 2%, close to the 1%. That's not middle class.

Instead of working for 40 hours a week and earning $400,000, I can opt to work for 20 hours a week and earn $200,000. These sort of insane taxes will only encourage unproductive activity.

Why do you equate time not spent getting paid with being "unproductive"?  There are plenty of worthwhile things you can do with your time that don't involve making yourself financially wealthier.  Is money really the only thing you care about?  Are there no other motivations to spur you on? 

At 400K in the US you're in the top 2%, close to the 1%. That's not middle class.

This doesn't make sense to me at all, I mean if you are actually rising it to a level where corporations are leaving the nation, then charge them even more if they ever want to work with USA people, simple as that. Let's say you start to charge Google a lot more money, and then they decide to relocate to Ireland, if google ever wants to make money from USA citizens, they will have to pay 50% for all the USA based income, simple as that.

It isn't that easy to move your base of operations,that is why they are doing this because they know that it will be difficult for companies to get out and the only way that they can prevent this kind of thing from happening is when they lobby the Senators and the right people to protect their interest.

In cities such as Los Angeles and San Francisco, 200K is not a big amount (that's what they get after the tax cut). And earning 400K in a city such as LA or SF can be much different from earning the same amount in a smaller and more affordable city such as Omaha or Memphis. If you further increase the taxes to 70% or 80%, then what is the point in working so hard? Instead of working for 40 hours a week and earning $400,000, I can opt to work for 20 hours a week and earn $200,000. These sort of insane taxes will only encourage unproductive activity.

There are more rich people than ever, and they're richer than ever, new billionaires every day, but taxes are too high ? Are you using some drug when writing this ?

You are talking about the Laffer curve, the concept is accepted as true but economists are always arguing about what is its actual shape, governments seem to think that they can push taxes higher and higher and that they are going to get more revenue, but as you said it comes to a point in which people begin to think about whether it is worth for them to keep working so hard when they are getting so little out of it, in that case it is better to do something else that you enjoy and not work as hard, very high taxes like the ones we are seeing today are one of the reasons why the economy is in such a bad shape.

Although I don't think that individuals in large numbers will move from one country to another due to high tax rates, in the long term it will only make the employees unproductive. Also, before Yellen talks about a unified global tax rate, she should look towards unifying income tax within the United States. Because it differs from state to state. In states like California, the combined state+federal income tax is >50% for the top most group, while in Republican states such as Texas and Wyoming, it is 37%.

And the irony is that California is bankrupt, due to incompetent and corrupt handling of the tax revenue, while TX is in a relatively better position.

https://www.paloaltoonline.com/news/2020/05/10/california-just-revealed-a-543-billion-deficit--signaling-deep-cuts-ahead

The problem is not democrat party or republican party, that has been established long time ago, it is known for the past 30 years, USA is a nation with "2" parties but the reality is that they are basically the same and nothing changes. Why? Because both of them use the tax income wrongfully and they do not use it directly helping the people. Look at the military budget, Bush increased it, then Obama got elected and increased it, then Trump got elected and increased it, then Biden got elected and increased it, now it is nearly getting to 800 billion dollars a year, do you know what you can do with that?

You can solve almost every problem in all of USA if you used that directly helping to people, it would seriously be enough to cover half of all universal health care and also if you cap pharma companies charging idiotic prices that would be enough to cover every single person who got sick, from flu to end level cancer. This is not democratic or republican, it is problem with politicians.

How to unify corporate tax globally. Each country has an economic structure, a different economic environment, the application of corporate tax affects other issues in the overall national policy. Not to mention that each country has different geographical locations, so the tax rates between countries must be different to ensure that countries have competition in attracting businesses.

First of all a country should have companies that serve the population and other companies of that country. International competition comes later and shouldn't be a major part of any economy. If a country lives from attracting foreign companies, that country is a freeloader, making tax revenue go down everywhere. To the benefit of very few people.

President Trump makes a wonderful decision by reducing the corporate tax to 21% and in the season when the pandemic has caused alot of damage there's a need for an increase of corporate tax but the 28% seems too big and I think 25% will still be fair.

I don't understand the rules and regulations the G20 nation use to operate but countries like Puerto Rico will suffer if they comply with the plan to increase global corporate tax and I don't think it will fair to them if they are forced to comply.

I don't think it's possible to find a solution for all the G20, even if 18 or 19 countries agree then there are a lot of advantages for one country to disagree. Money doesn't know borders and will always relocate to the most attractive countries. There are so many loopholes in tax laws which is why the big tax consultantancies are making so much money. In my opinion the best approach would be to simplify the tax laws tremendously. But this seems utopic at the moment.

LOL.. this is one of the funniest posts I ever saw in the Economics section of this forum. Dude.. this is a free world. People and companies are free to move anywhere of their liking. There are countries in the world where there is no corporate tax or income tax. I am talking about countries such as Bahrain, Qatar and Kuwait. And countries such as Qatar are among the richest countries in the world, and they don't really need to attract anyone. Once again, crying about your tax revenue going down is not going to help. On one hand, you elect socialists such as Kamala Harris and Janet Yellen to power and then you complain that the companies are moving out.

What do Bahrain, Qatar or Kuwait bring to the world ? Do they make Nobel peace prize scientists ? Do they advance peace ? Do they even treat people living in these countries well ?

These countries can't exist and can't function without real countries doing the real work. Hence, freeloaders.

You guys have to remember, these are people who are in for regulations and they like it, that is why they are trying to put regulations on crypto, but there is no ban, there will never be a ban, look at Coinbase, they had their IPO just recently, you think there could be a ban on that?

I don't think it's possible to find a solution for all the G20, even if 18 or 19 countries agree then there are a lot of advantages for one country to disagree. Money doesn't know borders and will always relocate to the most attractive countries. There are so many loopholes in tax laws which is why the big tax consultantancies are making so much money. In my opinion the best approach would be to simplify the tax laws tremendously. But this seems utopic at the moment.

What Yellen is mainly concerned about is that US companies pay their fair share of tax. If some countries don't implement the minimum corporate tax, it's not a problem, the US can declare that no US company has the right to have a presence in such a country.

LOL.. I don't think that the American government would be stupid enough to take such a step. For many of the American companies, a large part of the revenue comes from global markets. If they are not allowed in the global markets, then Chinese or Japanese companies will fill the vacuum. No one is having any issue with the American government taxing American companies. The problem arises when the American government want to dictate how foreign governments tax foreign companies.

Theses companies (Amazon, Google, Facebook, etc.) are already banned from China, so that wouldn't change much for them. There is Apple, but they can afford to pay the tax.

What Yellen is mainly concerned about is that US companies pay their fair share of tax. If some countries don't implement the minimum corporate tax, it's not a problem, the US can declare that no US company has the right to have a presence in such a country.

The reason for banning corporate rates is that it is difficult to attract investment if corporate rates are high. Entrepreneurs in this country have to pay a large part of their income as tax however the rate at which middle-income countries have reduced corporate taxes over the past three decades has made it easier to do business but here corporate tax is used to increase revenue. So even though there is talk of reducing corporate taxes before the budget every year the national board of revenue backs down every time.

That's impossible, a politician that isn't lobbied by corporations so they can continue to exploit the working class. I don't think that companies are going to like the idea of moving out of a country because of the tax laws in place, getting out of that country is going to hurt them real bad.

Some countries will always have a lower corporate tax just to get companies interested, not everyone is USA and have enough money to print trillions of dollars worth of money and end up being in the profit anyway, so many nations drop the corporate tax to minimum, even zero at times to attract money from other places. Hell if I had Facebook in my nation, I would charge them zero money for being here, even help them pay for some stuff, why? Because that would mean there would be a company worth hundreds of billions of dollars in my nation and that profit comes into my nation from outside, and they are hiring tens of thousands of workers, and they are getting headquarters, basically there are tons of things I can list that the nation would benefit from.
Long story short corporate tax can never be the same in every nation, some poor nations will try to attract rich companies one way or another.

Sithara007 : first of all this new corporate tax rate is only for people earning more than 1 million dollars a year. Granted, these people are the ones who own the majority of the stock market, but that's precisely a problem they also want to fix. You can't look at the stock market going up and up and up and conclude the economy is doing great, if most people don't benefit at all from that rise.

Considering what Biden wants to pay with the money raised, it's possible a state like California could end up lowering its own tax, since the federal government would now pay for things that California used to spend money on.

Bezos has given plenty of shares to his ex wife (not by choice) and also sells stock every year to fund Blue Origin, his rocket company, to the tune of 1 billion a year.

Stocks go up but bond yields don't, US pensioners usually rely on bonds not stocks.