On May 18, U.S. Treasury Secretary Janet Yellen spoke to the U.S. Chamber of Commerce at their Global Forum on Economic Recovery, continuing her pitch on increasing corporate taxes and reducing or eliminating current incentives for raising corporate profits overseas at low-tax countries . Secretary Yellen’s remarks to the Chamber come at the same time the Chamber is trying to prevent these corporate tax increases.
Are corporate profits shifting to low-tax offshore jurisdictions at risk?
Foreign Minister Yellen’s speech reads: “With a corporate tax at an all-time low of 1% of GDP, [she believes] to which the corporate sector can contribute [reducing inequality and rebuilding the country’s infrastructure] by bearing his fair share. We propose to bring corporate taxes back to their historical norms. ”Since 1995, through the Trump tax reform legislation in 2018, the typical highest marginal corporate tax rate has been 35%, which when lowered by Trump’s tax reform to a maximum Rate of 21% was.
Continuing her attack on corporate profit shifting, Foreign Minister Yellen said: “At the same time, we want to remove incentives that reward companies for relocating their businesses abroad and for shifting profits to low-tax countries. As part of this effort, we are working with our international partners on a global minimum corporate tax to stop the race to the bottom. “
Secretary Yellen’s message to the Chamber comes at the same time as the Chamber is trying to prevent corporate tax increases. Chamber President Suzanne P. Clark opened the global forum by reiterating business opposition to corporate tax hikes and saying that doing so would make the country less competitive. “The data and evidence is clear,” said Clark. “Tax increases would put American companies at a severe disadvantage. There are other ways to finance it. “
Are US Tax Hikes Coming?
As part of his $ 4.1 billion (that’s $ 4.1 trillion) infrastructure and family support plans, President Biden proposed raising the corporate tax rate from the current 21% to 28%. At this point, key moderate Democrats have signaled that they are only ready to hike the rate to 25%. Senate Republicans continue to obscure proposals from both Biden and the moderate Democrats who refuse to reconsider Trump’s 2018 corporate tax cuts.
Finally, Secretary of State Yellen said the move to a smaller government and lower taxes over the years has resulted in insufficient investment in infrastructure, family support and new programs to address modern economic problems. “This approach to US fiscal policy, based on a distrust of the motives and effectiveness of government, along with opposition to higher taxes, has profound implications for our nation and our people. We are confident that the investment and tax proposals in the establishment plan as a package will increase the net profitability of our companies and improve their global competitiveness. We hope that business leaders see it that way and support the establishment plan. “
© 2021 Norris McLaughlin PA, All rights reservedNational Law Review, Volume XI, Number 158