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 than $2 trillion infrastructure package, known as the American Jobs Plan.
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 rate to historic norms, while keeping it below the 35% rate which was in place before the passage of President Trump 2017 tax cuts. At the same time, the proposal calls for raising the minimum tax on U.S. multinational corporations from 10.5% to 21%, which would be calculated on a country-by-country basis.
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 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 bases 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 critical investments.
According to the Tax Foundation, the average corporate tax rate across 177 different jurisdictions in 2020 was just under 24%.