Name: To Halt '30-Year Race to the Bottom,' Yellen Calls for Global Minimum Tax on Corporations
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To Halt '30-Year Race to the Bottom,' Yellen Calls for Global Minimum Tax on Corporations

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Sign up for our newsletter.Quality journalism. Progressive values. Direct to your inbox.Follow us: Common Dreams will never be locked behind a paywall because we believe our journalism should remain freely available to everyone ― not just those who can afford to pay. By becoming a sustaining monthly donor today, you can help make sure our work remains free for those who aren't able to chip in. Donate Now ×To donate by check, phone, or other method, see our Treasury Secretary Janet Yellen speaks in Wilmington, Delaware on December 1, 2020. (Photo: Demetrius Freeman/The Washington Post via Getty Images) "A high global minimum tax can change the face of globalization—by making its main winners (multinational companies) pay more in taxes, instead of them paying less and less." In an effort to end what she called the "30-year race to the bottom on corporate tax rates," U.S. Treasury Secretary Janet Yellen on Monday urged her counterparts around the world to join her in embracing a global minimum tax aimed at preventing companies from shifting profits offshore to slash their bills.The proliferation of so-called "tax havens" around the world in recent years to the sharp decline in the average global corporate tax rate—which has fallen from around 40% in 1980 to —as countries adjusted their rates downward to either attract multinationals or prevent companies from seeking to stash their profits elsewhere.Yellen argued in a to The Chicago Council on Global Affairs Monday that the "pressures of tax competition" are eroding corporate tax bases across the world, undermining nations' efforts to establish "stable tax systems that raise sufficient revenue to invest in essential public goods and respond to crises."As the Washington Post's Jeff Stein last month, "From 2000 to 2018, 76 countries cut their corporate tax rates, according to the OECD. Over that same period, 12 countries maintained their corporate tax level, and only six increased them. In 2000, more than 55 countries had corporate tax rates above 30 percent. Now, fewer than 20 do."In her address, Yellen vowed to work 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," she added.In her first major address, Treasury Secretary Janet Yellen says the global minimum corporate tax rate would “stop the race to the bottom.” — The Recount (@therecount) Gabriel Zucman, an associate professor of economics at the University of California, Berkeley, Yellen's push for a global minimum tax, a proposal he has long as a way to eliminate incentives for offshoring."A high global minimum tax can change the face of globalization—by making its main winners (multinational companies) pay more in taxes, instead of them paying less and less," Zucman said following Yellen's remarks Monday.While Yellen didn't specify a preferred rate for the proposed global minimum tax, U.S. President Joe Biden's recently released infrastructure proposal hiking the minimum tax on U.S. multinational corporations to 21 percent—up from the current 10.5% level set by the GOP's 2017 tax law—and calculating the rate "on a country-by-country basis so it hits profits in tax havens."In a (pdf) published earlier this year, Zucman and two of his colleagues offered an example of how Biden's minimum corporate tax proposal would likely work:In its simplest form, collecting the tax deficit of multinationals involves taxing the foreign earnings of U.S. multinationals at some minimum rate (21% in the case of Biden's proposal), with credits given to offset foreign taxes paid. For example, imagine that Apple books $10 billion in profits in Ireland—taxed in Ireland at 5%—and $3 billion in Jersey—taxed in Jersey at 0%. The United States would tax Apple's Irish income at 16% and Apple's Jersey income at 21%.More broadly, the United States would impose country-by-country taxes such that Apple's effective tax rate, in each of the countries where it operates, equals at least 21%. In other words, the United States would, for its own multinationals, play the role of tax collector of last resort: it would collect the taxes that foreign countries chose not to collect.This policy does not violate any international treaty. It does not require the cooperation of tax havens. It doesn't even require new data: the necessary information exists.Commentators in Ireland are already fretting about what the Biden administration's push for a global minimum tax could mean for the country's status as one of the world's . Cliff Taylor of The Irish Times last week that "the Republic's 12.5% corporate tax rate is facing a new threat, with the United States signaling its support... for a global minimum corporate tax rate.""It remains to be seen what is passed by the U.S. Congress," Taylor wrote, referring to Biden's infrastructure plan, "but the implication is that if the bulk of this is passed, Ireland's 12.5% rate may no longer be a significant attraction for U.S. companies looking for where to invest."Biden corporate tax plan released today:- Increase rate to 28%- Tax profits booked by US firms abroad at 21%, country by country- Calls for strong global minimum tax (with penalties for uncooperative countries)If enacted, the development model of tax havens collapses— Gabriel Zucman (@gabriel_zucman) In a released Monday, experts at the Center on Budget and Policy Priorities argued that "reforming U.S. taxes on the foreign profits of U.S. multinationals would position the United States as a global leader in international taxation, which is especially important this year as OECD countries work toward a once-in-a-century global tax deal." More than are taking part in the OECD talks, which began in 2017."Yellen has expressed a desire to engage 'robustly' in these negotiations, and Congress should support that effort," the report notes. "Moreover, reforming the international tax system would raise significant revenue to invest in infrastructure and workers, which is a far better way to strengthen the economy and support innovation than continuing to permit large-scale tax avoidance by multinationals that drain U.S. revenues and encourage multinationals to locate profits and investment offshore."Our work is licensed under Creative Commons (CC BY-NC-ND 3.0). Feel free to republish and share widely. We've had enough. The 1% own and operate the corporate media. They are doing everything they can to defend the status quo, squash dissent and protect the wealthy and the powerful. The Common Dreams media model is different. We cover the news that matters to the 99%. Our mission? To inform. To inspire. To ignite change for the common good. How? Nonprofit. Independent. Reader-supported. Free to read. Free to republish. Free to share. With no advertising. No paywalls. No selling of your data. Thousands of small donations fund our newsroom and allow us to continue publishing. Can you chip in? We can't do it without you. Thank you. Donate Now ×To donate by check, phone, or other method, see our "The opposition is loud and only getting louder," said Democratic Rep. Raúl Grijalva. "Looks like removing crushing debt burdens for families is a political winner after all," said the Groundwork Collaborative executive director. Independent state legislative theory—a formerly fringe right-wing notion that state lawmakers alone can regulate federal elections—will be tested in the U.S. Supreme Court in the coming months. After withholding raises from unionized employees earlier this year, "Starbucks is doubling down on the illegality," said one critic. "People must be able to add their voice, without fear of retaliation, to the public debates that will determine the future direction of our country and our planet." Donate ×To donate by check, phone, or other method, see our

Sign up for our newsletter.Quality journalism. Progressive values. Direct to your inbox.Follow us: Common Dreams will never be locked behind a paywall because we believe our journalism should remain freely available to everyone ― not just those who can afford to pay. By becoming a sustaining monthly donor today, you can help make sure our work remains free for those who aren't able to chip in. Donate Now ×To donate by check, phone, or other method, see our Treasury Secretary Janet Yellen speaks in Wilmington, Delaware on December 1, 2020. (Photo: Demetrius Freeman/The Washington Post via...

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Jake Johnson is a staff writer for Common Dreams.

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Jake Johnson

Common Dreams NewsCenter, often referred to simply as Common Dreams, is a 501(c)(3) nonprofit, U.S.-based, news website that declares itself as serving the progressive community. Common Dreams publishes news stories, editorials, and a newswire of current, breaking news. Common Dreams also re-publishes relevant content from numerous other sources such as the Associated Press and had published writers such as Robert Reich and Molly Ivins. The website also provides links to other relevant columnists, periodicals, radio outlets, news services, and websites.

To Halt '30-Year Race to the Bottom,' Yellen Calls for Global Minimum Tax on Corporations

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