WASHINGTON (Pakistan Point News / Sputnik - 05th May, 2021) The Biden administration plans to make it harder for big US companies to base their headquarters in tax havens outside the United States to prevent them from not paying or paying minimal taxes back home, Treasury Secretary Janet Yellen said Tuesday.
"We're going to make it more difficult for them to be able to deduct the payments that they make to their tax havens and that's a way of disincentivizing the move to tax havens," Yellen said in a live-streamed interview with the Wall Street Journal.
President Joe Biden sent shockwaves across business community last month when he proposed raising corporate taxes from 21 percent to 28 percent to fund his� $2.3 trillion infrastructure program.
Biden proposed last month a global minimum for corporate taxes. He has repeatedly demanded that large US companies pay their "fair share" and vowed to crack down on those that employ complicated maneuvers to reduce or eliminate their tax bills by shifting income on paper between countries.
More than a thousand big, mostly US corporations - including eBay, Google, Facebook, PayPal, microsoft, Yahoo, AOL, Twitter, Intel. Pfizer, Boston Scientific and Johnson & Johnson - have their tax base in Ireland to take advantage of corporate taxes there that stand at 12.5 percent. Apple is having its tax base in the island of Jersey, which has zero corporate tax and is located in the English Channel between England and France.
Yellen did not specify how the Biden administration intends to plug the loopholes in US corporate taxes. However, Yellen said she expected other countries, including tax havens, to join the United States in trying to claw more revenue from the US companies operating on their shores.
"I fear that this reach to the bottom globally. with respect to corporate taxes, is depriving countries of the revenues that they really need to invest in infrastructure, education, R&D, and other things could spur growth and also impact corporate competitiveness," Yellen said. "So we're asking companies to step up and pay a little bit more to help realize fiscal priorities that are equally important in making them competitive and doing it in a context where we'll see an increase in global rates as well. I'm sensing some tax havens will go along with this themselves. If not the global minimum tax, they will retain some business but insist on higher taxes."
Biden's tax hikes have so far been vehemently opposed by American businesses. The US Chamber of Commerce has vowed to fight the hikes, with Chief Executive Suzanne Clark calling them "outrageous" and wanting "to punish people for investing in the economy."
