The Treasury Department proposed a 15% global minimum corporate tax rate during meetings with officials from other countries.
The 15% figure is lower than anticipated and was pitched this week to negotiators from two dozen countries that are part of the Organization for Economic Co-operation and Development, the Treasury Department announced on Thursday.
The administration said that U.S. representatives who attended the tax negotiations underscored to the other representatives that 15% is a “floor” to start the dialogue “and that discussions should continue to be ambitious and push that rate higher.”
“Treasury was heartened by the positive reception to its proposals and the unprecedented progress being made towards establishing a global corporate minimum tax,” the Treasury said in a readout about the meetings.
PIZZA DELIVERY COMPANY BRINGS SHARP TASTE OF LABOR SHORTAGES AND ECONOMIC SQUEEZE
The proposed “floor” rate is still higher than the corporate tax rate of some countries, including Ireland, which has a 12.5% rate. It is worth noting that Ireland is not a member of the steering committee handling the negotiations through the OECD. Hungary, which has a corporate income tax rate of only 9%, has also bucked the notion of a global minimum tax.
Companies in the United States pay a 21% corporate tax rate, a number that was lowered from 35% as part of then-President Donald Trump’s tax cuts. The Biden administration has proposed hiking the 21% domestic rate to 28% as a way to pay for the president’s $2.3 trillion infrastructure package, although the proposal has been met with strident opposition among Republicans and business groups.
Separately, the Biden administration has proposed doubling to 21% the tax on Global Intangible Low Tax Income, known as GILTI, a provision of the Trump tax overhaul that is meant to ensure that foreign earnings of U.S. multinational companies are taxed at a rate of at least 10.5%.
The administration has been advocating for reform of the global tax system in order to prevent a “race to the bottom,” which it says has resulted in lower and lower taxes as countries compete for business. Treasury Secretary Janet Yellen contends that a global minimum tax would help prevent tax rates from falling.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
“Treasury made clear that a global corporate minimum tax rate would ensure the global economy thrives based on a more level playing field in the taxation of multinational corporations, and would spur innovation, growth, and prosperity while improving fairness for middle class and working people,” the department said in a news release.
