(The Center Square) – Ahead of the UK’s G-7 summit, a recently announced global minimum corporate tax deal between the Biden administration and six other leading economies in the world is facing stiff opposition from Republicans in the US
Treasury Secretary Janet Yellen, along with Treasury Ministers from Canada, France, Germany, Italy, Japan and the United Kingdom, announced a framework for a minimum global corporate tax of at least 15%. The tax would be independent of where the company is based and would also include provisions to redistribute profits from large companies to the countries where the company’s services are used.
At a press conference following the meeting of G7 finance ministers on Saturday, Yellen expressed optimism about the broad agreement between the nations.
“For too long there has been a global race to the bottom on corporate tax rates – where countries compete by lowering their tax rates rather than ensuring the well-being of their citizens and the natural environment,” Yellen said. “The G-7 took significant steps this weekend to end the existing damaging dynamic and made commitments today that will provide a huge boost to achieving a robust global minimum tax of at least 15%.
This G-7 corporate tax increase agreement follows President Joe Biden’s proposals to raise the domestic corporate tax rate to 28%.
Yellen reiterated the American Jobs Plan domestic proposal for a minimum corporate tax rate of 28%, a percentage that has also been widely criticized as uncompetitive. She also made it clear that the agreed general rate of 15% was not the final rate and could still be increased.
The new deal would likely have a negative impact on multinational tech companies like Facebook and Apple, which would pay more taxes overall.
Critics of the deal said a minimum corporate tax rate among the G-7 could allow countries not part of the deal, such as Ireland and other non-G-7 European countries, to fall below corporate tax rates of 15% and Advancing business in non-G-7 countries.
Domestically, Republicans are strongly opposed to corporate tax rate increases and seek to protect the Trump-era tax cuts. The GOP has also spoken out against this agreement between Yellen and the other G-7 countries.
In an interview with Larry Kudlow on the Fox Business Network on Monday, Senator Pat Toomey vigorously opposed the proposal for a global minimum corporate tax.
“That’s a terrible idea,” said Toomey. “They characterize the competition for economic freedom as a ‘race to the bottom’, we should win this race, they want to make sure that this race doesn’t even take place.”
Toomey also made it clear that no Republican senator would support the Senate corporation tax increase proposal.
“There will be no Republican support for that, and they will have to do it in a party vote,” Toomey said.
Senator John Barrasso, chairman of the Republican Senate Conference, also rejected the agreement in talks with reporters in the Capitol. Barrasso criticized the agreement as “anti-competitive” and “anti-US”, among other things.
Sharp Republican opposition comes when negotiations between the White House and GOP Senators over an infrastructure package have reportedly encountered a roadblock.