President Biden’s Tax on Multinational Corporations
President Biden's plan for a 15 percent minimum global tax on multinational corporations made headway over the weekend, when finance leaders of the Group of Seven nations agreed to push for a minimum tax that would be imposed on corporations no matter where they locate their headquarters. The group also agreed to seek a new tax on large businesses aimed at avoiding dozens of digital taxes around the world. Per Treasury Secretary Yellen, "that global minimum tax would end the race-to-the-bottom in corporate taxation, and ensure fairness for the middle class and working people in the U.S. and around the world." A minimum tax is a key ingredient in President Biden's plan to help pay for infrastructure and to counter an impulse by corporations to seek offshore tax havens if the U.S. corporate income rate is raised from 21 percent to 28 percent. That proposed rate hike remains part of President Biden's plan, even though he shelved it temporarily in an effort to reach a bipartisan infrastructure deal, the Transportation Secretary Buttigieg said. But the commitment by the G-7 to a global minimum tax is only the first step in what could still be a long process for enactment. The concept still needs support from the Group of 20 leading industrial nations as well as a broader group of over 100 countries negotiating for global standards. Congress would still need to pass any implementing changes to U.S. tax law, as well as potential treaty ratifications that would require a two-thirds Senate vote.