President Joe Biden on Friday crowed over an initiative his administration pushed earlier this year to set a global minimum corporate tax rate of 15 percent as 136 countries have signed on thus far including Ireland, which initially signaled its opposition.
The Organization of Economic Coordination and Development (OECD), which took the lead in negotiating the minimum rate with member countries, announced that nearly all of 140 countries within the group had signed on to the Biden administration proposal. In addition to setting the 15 percent minimum, the signatory nations also agreed to crack down on tax havens within their borders.
“Today’s agreement shows how American leadership and diplomacy is advancing the economic interests of American working families,” said Biden.
“For decades, American workers and taxpayers have paid the price for a tax system that has rewarded multinational corporations for shipping jobs and profits overseas. This race to the bottom hasn’t just harmed American workers, it’s put many of our allies at a competitive disadvantage as well,” he added.
Sri Lanka, Kenya, Nigeria, and Pakistan have not agreed to the plan, the Daily Mail reported.
“Establishing, for the first time in history, a strong global minimum tax will finally even the playing field for American workers and taxpayers, along with the rest of the world,” Biden continued, adding that the agreement encompasses 90 percent of the world’s GDP. He said the agreement will “ensure that profitable corporations pay their fair share, and provide governments with the resources to invest in their workers and economies.”
“My Build Back Better agenda, now being considered by Congress, will build on this agreement,” he noted. “It will eliminate incentives to shift jobs and profits abroad, and ensure that multinational corporations pay their fair share here at home.
“This international agreement is proof that the rest of the world agrees that corporations can and should do more to ensure that we build back better,” he said.
Biden’s announcement comes as his administration pushes the Democrat-controlled Congress to hike the U.S. corporate tax rate from its current 21 percent to 28 percent. The White House had sought to get nations in the OECD to agree to a 21-percent minimum.
The current U.S. corporate rate was lowered from 35 percent, where it had been for years, in 2017 under then-President Donald Trump’s tax reform measure that also lowered personal income tax rates for a majority of Americans. Biden and Democrats are attempting to raise personal income tax rates on Americans earning more than $400,000 per year, though as inflation has continued to rise during his nearly 10 months in office, economists say that serves as a hidden tax on all Americans regardless of income level.
“Under the agreement, tech giants like Amazon and Facebook would also be required to pay taxes in countries where their goods or services were sold, even if they have no physical presence there,” the Daily Mail added. “Rich nations have struggled for years to agree how best to raise more cash from tech giants such as Google, Amazon and Facebook.”
In remarks before the OCED announcement, U.S. Treasury Secretary Janet Yellen noted that the “international tax agreement will stop the four-decade-long race to the bottom on corporate taxation — where tax authorities offer lower tax rates to attract business, leading others to respond with lower rates.”
Republicans had been pushing for lower corporate tax rates for years as a means of keeping American corporations from relocating to other countries.
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