America’s Treasury Secretary (Finance Minister) Janet Yellen’s speech at the Chicago Council and Global Affairs had worldwide attention. The main reason for this is that the speech was given just before the commencement of the joint meeting of the International Monetary Fund (IMF) and the World Bank. Therefore it was decided that this speech would be kept in mind with the global audience. The second reason is that the Biden administration’s global priorities in economic matters were expected to be indicated by this address. The IMF-World Bank common meeting began on Monday, which will run till April 11.
Yellen in her speech called on all countries of the world to set a minimum global rate of income tax. That is, a rate should be fixed by which no country will keep a low income tax rate. Significantly, the Biden administration has proposed an increase in the corporate tax rate in the US. But it has been criticized by the Republican Party and the corporate sector for saying that if the tax rate rises, American companies will move for business to countries where the tax rate is low.
Janet Yellen said that for the last 30 years, there is a competition between different countries to reduce the tax rate in order to call multinational companies. He said- “It needs to be ensured that governments maintain stability in the tax system, so that more revenue can be raised for investment in public good works.” He said that now America will try to work with G20 countries A minimum tax rate can be set for the whole world.
Analysts say the US challenges are behind this approach of the Biden administration. The Biden administration has proposed raising the corporate tax rate from 21 to 28 percent. The United States had a 35 percent corporate tax rate before Donald Trump became president. But Trump had reduced it directly to 21 per cent. Now President Biden has proposed taking the middle path to 28 per cent. But this proposal will be able to get approval in the Senate, its chances are weakened.
The Republican Party is already strongly opposed to this proposal. Now Democrat Senator Joe Menchin has also said that he will not support the proposal to raise taxes. He also claimed that besides him, six to seven other Democrat senators are not comfortable with the proposal. Significantly, in the 100-member Senate, both parties have 50 members each.
According to an analysis by the Conservative think tank Tax Foundation, the G-7 member countries of the rich countries have an average rate of corporate tax of 24 per cent. Biden’s proposal also includes raising the tax rate to 10.5 to 21 percent on the profits of American companies earned abroad. But critics have said that this rate will still be below 28 per cent. Therefore, American companies will remain eager to go abroad and do business. The Biden administration is attempting to address such fears.
Janet Yellen’s speech is being seen in this connection. Yellen, through a recent speech, tried to convince the finance ministers and central banks around the world that at this time it is necessary to adopt all these together. He said- “Through a global minimum tax rate, we can ensure that the world economy flourishes, leading to invention, development and prosperity.” According to analysts, Yellen in a way that this comment It has been taken that if America alone takes the step of increasing the tax, then it can harm the American economy.