June 5, 2021 - Douglas Myser

Fifteen percent global tax. The Biden administration is proposing a global minimum tax of at least 15% as it looks to level the playing field and stop what Treasury Secretary Janet Yellen has called the "race to the bottom". However, the Treasury Department said that 15% is just the starting point and they will push for that rate to be higher. The initial proposal comes as officials with the Treasury's Office of Tax Policy participated in meetings with officials from 24 nations over the last two days as part of the Organization for Economic Cooperation and Development's international tax negotiations. Treasury Department officials said the administration was "heartened" by the reception of its proposal. A comprehensive agreement to set a global minimum tax is one of the provisions in the administration's Made in America Tax Plan which includes a series of tax provisions that if implemented, would cover the cost of the president's more substantial social spending programs. Fifteen percent global tax.

A global minimum tax set at 15% would be lower than what the Biden Administration is pushing as a new U.S. corporate tax rate and what it has proposed as the minimum tax on U.S. multinational corporations. As part of his tax plan, the president has called for increasing the corporate tax rate to 28%, up from its current 21%. With the increase, officials have argued it would return the corporate rate to historic norms, while keeping it below the 35% rate before passage of President Trump's tax cuts in 2017.

Speaking last month, Yellen said setting a new global minimum tax would ensure that the global economy thrives on a more level playing field and could spur innovation and economic growth. The Treasury Department said during this week's negotiations, it expressed its belief that they need to create an environment where countries work together to maintain their tax base and ensure the system is equitable. It said the current global tax rate---essentially set at zero percent---undermines countries ability to raise revenue necessary to make crucial investments.