The U.S. Treasury Department has proposed that corporations around the world pay a global minimum corporate tax rate of 15%.
The final minimum tax rate could be higher, according to a news release from the U.S. Treasury that said the 15% minimum is a “floor and that discussions should continue to be ambitious and push that rate higher.”
U.S-based companies currently pay a 21% corporate tax rate, a level that was cut during the Trump administration. Previously, the top rate had been as high as 35%. Under a proposal from U.S. President Joe Biden, the corporate tax rate would be lifted to 28%, part of a plan to raise levies on both companies and the highest income earners in America.
Now, the White House is taking its tax plan beyond the U.S.
Treasury Secretary Janet Yellen has been touting the benefits of a global corporate minimum tax rate that she said would discourage companies from relocating domiciles to other nations to cut their tax burdens even though most of their operations are based in the U.S.
Yellen has criticized what she calls a global “race to the bottom” among countries cutting their tax rates to lure foreign companies. Establishing a global minimum corporate tax rate would help reduce that incentive, although it is unclear how many countries are willing to participate.
The news came following meetings with a steering group within the Organization for Economic Cooperation and Development (OECD) that the U.S. Treasury said featured “earnest” talks about a global tax.