Yellen said the global minimum corporation tax goes well with our domestic corporation tax proposals and has the particular advantage of leveling the playing field for US business.
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Yellen responded to US Senator Mike Crapo, who last month asked questions about the Treasury Department’s approach to international tax negotiations with the OECD.
In her June 4 letter seen by TP News, Yellen said that “the US Treasury Department is concerned that the current international tax system has undermined national sovereignty in ways that have real and measurable effects on American workers and Has families ”.
“For too long, harmful tax competition has deprived governments of necessary resources and prevented them from delivering for their citizens. While national sovereignty is cited to justify this dynamic, we think the race to the bottom in corporate tax rates is actually hampering national sovereignty by preventing governments from funding urgent fiscal priorities, ”the letter reads.
The letter reads: “We see the OECD Pillar 2 in protecting national sovereignty by stopping the pressure that has forced the race on corporate tax rates down, and thereby increasing the scope for an independent national tax policy in one globalized world. By working with other governments in the context of the OECD / G20 negotiations, we can put our economies and those of other countries on the path to a sustainable and inclusive recovery more effectively than if we had acted alone. “
“Multilateral cooperation to stabilize the international economy is particularly appropriate this year, as the pandemic, like the global financial crisis of 2008, reminded us that the well-being of our country in the globalized economy is tied to developments at home and abroad.”
Yellen said the global minimum corporation tax goes well with our domestic corporation tax proposals and has the particular advantage of leveling the playing field for US business.
She said that “ending tax competition through a robust global minimum tax will allow countries to compete on more positive foundations such as education and training of the workforce, legal stability and innovation – areas where” the United States has a comparative advantage. “
The letter reads: “We agree that an OECD international tax treaty must neither harm US companies and workers nor undermine the tax sovereignty of the United States. Any agreement must also recognize the constitutional role of Congress in determining national tax policy and ultimately protecting US finances. The government’s proposals on OECD Pillars 1 and 2 and the international tax proposals in the newly published Green Paper are geared towards these goals. “
The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and regularly writes news on transfer pricing and international tax law. Alex can be reached at editor@transferpricingnews.com