U.S. Treasury Secretary Janet Yellen called on other countries to join Washington and set the world’s lowest tax rate for companies because she vowed to reaffirm America’s leadership in international economic policy.
Yellen said in a speech at the Chicago Global Economic Council: “We can jointly use the lowest global tax to ensure that the global economy thrives on the basis of fairer competition for taxation by multinational corporations, and stimulates innovation, growth and prosperity.” Monday Affairs.
Yellen made an appeal on the eve of the spring meeting of the International Monetary Fund and the World Bank, and the Biden administration made the fight against tax avoidance and tax avoidance measures at the core of its economic agenda.
The White House released a plan last week to invest more than $200 million to transform decaying infrastructure and increase clean energy products. It hopes to pay for the proposal with a higher corporate tax rate, an increase in its own global minimum tax rate, and other measures aimed at preventing the transfer of profits across borders for tax reasons.
Yellen said: “Competitiveness is not just about companies based in the United States competing with other companies in global M&A bids.”
The United States has been striving to reach a multilateral agreement on digital taxation at the OECD in the summer, but Yellen’s proposal is to strive for a broader corporate taxation agreement in the G20 and other countries.
However, as Yellen pushes for a global agreement on corporate taxation, the Biden administration is facing a fierce battle with its proposal to increase US corporate taxes, including a new rule that will increase the global minimum corporate tax from 10.5% to 21%. . Republicans on Capitol Hill and business groups have stated that such tax increases will undermine the competitiveness of American multinational corporations.
Republican Senator Pat Doumet of Pennsylvania said: “Secretary Yellen basically admits that the increase in Biden’s tax rate will make American workers and companies less competitive. That’s why Secretary Yellen asked other developed countries to pass themselves. Increase taxes to punish its workers and businesses.”
Senator Joe Manchin, a centrist Democrat from West Virginia, made a key vote in the House of Lords. He also hinted that Biden’s corporate tax plan was too aggressive, saying that he would only increase the U.S. tax rate from 21% to 25%, other changes are needed. Biden plans to increase this ratio to 28%.
“If I don’t vote for it, it doesn’t make any sense. Therefore, we will play some role here,” Manchin told a local radio station.
Yellen emphasized in his speech that after Donald Trump became president, facing global challenges, including the fight against the coronavirus pandemic and climate change, the United States is interested in restoring its economic leadership in the world. status.
“The United States must never mean the United States in the first place. Because in today’s world, no country can provide its own people with a strong and sustainable economy. Over time, the lack of global leadership and participation will make us Institutions and the economy have become fragile,” she said.
“The United States needs to have a strong influence in the global market in a level playing field. We will work with willing partners to protect and enforce rule-based orders.”
However, the former Fed chairman warned that the economic ties between the United States and China are more complicated. “Our economic relationship with China, like our broader relationship with China, will compete where it should exist, cooperate where it may exist, and confront where it must exist.”
Yellen also served as the chairman of the White House Council of Economic Advisers at Bill Clinton, expressing regret over the past implementation of US economic policies.
“In the process of promoting economic growth, we ignore the environment. When we adopt new technologies, we are not prepared enough to prepare our workers and our education system for the ongoing changes. When trade is seen as an engine of growth, we ignore those who have not benefited,” she said.
Although the Fed had predicted that the United States’ gross domestic product (GDP) growth rate could reach 6.5% this year, which would allow the disease to rebound strongly from the flu pandemic, Yellen said that in the coronavirus crisis, “it is not yet a developed economy. It is too early for the body to declare victory.”
Yellen said: “I urge our partners to continue to make strong financial efforts to avoid premature withdrawal of support in order to promote a strong recovery and help avoid global imbalances.”
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She also said that the slow rate of vaccination in many developing countries will lead to “deeper and longer-lasting crises, debt problems, deep-rooted poverty and growing inequality.”
Yellen dispelled concerns that the stimulus will cause unhealthy inflation, saying that the risks of economic recovery are “asymmetric”, and doing too little is more dangerous.
“I do believe that we have the fiscal space to act boldly. I think this is essential to alleviate the pandemic pain and the long-term adverse effects on our potential output in the United States.”