The United States wants to fundamentally reform its corporate tax policy and stop a worldwide "race to the bottom," Treasury Secretary Janet Yellen said Tuesday
WASHINGTON (Pakistan Point News / Sputnik - 18th May, 2021) The United States wants to fundamentally reform its corporate tax policy and stop a worldwide "race to the bottom," Treasury Secretary Janet Yellen said Tuesday.
In a speech to the US Chamber of Commerce, which represents more than 3 million US business owners, Yellen said the Treasury wanted to "eliminate incentives that reward corporations for moving their operations overseas and shifting profits to low-tax countries." She added: "As part of this effort, we are working with our international partners on a global minimum corporate tax to stop the race-to-the-bottom."
Under what will likely be the first major federal tax overhaul in almost 30 years,President Joe Biden plans to raise corporate taxes from 21 percent to 28 percent to pay for US development plans running into trillions of Dollars in the post-pandemic era.
The president has also proposed a global minimum for corporate taxes and vowed to crack down on large US companies that have long employed complicated maneuvers to reduce or eliminate their tax bills by shifting income on paper between countries.
More than 1,000 large, mostly American corporations including eBay, Google, Facebook, PayPal, microsoft, Yahoo, AOL, Twitter, Intel, Pfizer, Boston Scientific and Johnson & Johnson have their tax base in Ireland, which has a corporate tax of just 12.5 percent compared to the US rate of 21 percent.
Apple parks its profits in the island of Jersey, which is located in the English Channel, between England and France and has no corporate taxes.
Yellen said US corporate taxes were at a historical low of one percent of gross domestic product, or GDP.
"We believe the corporate sector can contribute to this effort by bearing its fair share: we propose simply to return the corporate tax toward historical norms," Yellen said.
Many US corporations and business groups oppose the Biden administration's tax hikes. US Chamber of Commerce CEO Suzanne Clark has called the idea "outrageous," saying it will put US corporate taxes at the highest among developed countries and "punish people for investing in the economy."
"Wrong policies from the government could stop the US economic recovery in its tracks," Clark said in a statement on Tuesday issued after Yellen's speech. "That's why the Chamber is fighting back against proposals such as raising corporate tax rates to the highest in the developed world, which would disincentivize inbound investment."
The US economy shrank 3.5 percent in 2020, but rebounded by a dynamic 6.4 percent in the first quarter. Federal Reserve Vice Chairman Richard Clarida predicted on Monday that GDP growth for all 2021 could be as much as 7.0 percent, the highest in 35 years.
