- The New York Times reports that the US is proposing at least a 15% global minimum tax rate.
- That nonbinding rate is meant to prevent corporations from going to countries with lower taxes.
- The global minimum push comes as President Biden moves to increase corporate taxes at home.
- See more stories on Insider’s business page.
The Treasury Department has proposed at least a 15% global minimum tax rate for corporations in recent negotiations, The New York Times reports.
Treasury officials told the Times that their proposal was met “enthusiastically;” it’s a lower rate than anticipated, but they told the paper that it marks a “pivotal moment” in the ongoing negotiations.
The global minimum tax is meant to prevent multinational corporations from moving their operations to a country with a more favorable tax rate. It’s nonbinding, and would have to be mutually agreed on by the countries adopting it; it’s been an ongoing topic in negotiations among the Organization for Economic Cooperation and Development (OECD). Treasury Secretary Janet Yellen, who has been at the forefront of the current push around the global minimum tax, has said that it’s meant to halt the “race to the bottom.”
It also fits with the Biden’s administration proposal to increase corporate taxes at home. The president has proposed increasing the current corporate rate of 21% to 28%; it was slashed from 35% in former President Donald Trump’s 2017 tax bill.
While the US will likely end up with a domestic corporate tax rate closer to 25%, an increase could stoke fears of competitiveness with other countries. That would be addressed by the uniform rate, disincentivizing multinational companies from packing up and heading elsewhere.
A 15% rate would still be lower than the 21% rate that German and French ministers have backed, although Treasury officials told the Times they see that number as a floor, and will continue to push upward. In fact, they said other countries ” were receptive to the idea of” a higher rate, depending on how American tax policy shakes out.
In February, a UN Panel – the High Level Panel on International Financial Accountability, Transparency and Integrity for Achieving the 2030 Agenda (FACTI) – recommended a global rate between 20% and 30%. They noted the importance of a higher minimum rate for developing countries, which tend to have higher rates on the whole.
However, a global minimum tax rate would likely still have a rocky road ahead in the US. It would have to pass through some form of legislation; at least one Republican senator has signaled their opposition to it. And the fate of taxes in the US is still relatively unknown as infrastructure talks heat up the summer. One thing’s for sure: It’ll be a hot tax summer, as negotiations both abroad and at home continue.