Joe Biden is known to be pushing for higher taxes such as corporate tax and income tax by the US administration.
The tax increase is also President Biden’s pledge for the presidential election, which is aimed at reducing the financial burden from implementing the Corona 19 economic stimulus and promoting infrastructure construction and increasing tax equity.
In particular, the Biden administration is also pursuing a plan to set a lower limit on corporate tax rates for multinational corporations at a global level, considering that competition for global corporate tax rate cuts is aggravating financial difficulties and is favorable only to companies.
According to Bloomberg News on the 15th local time, the Biden administration is pushing for a comprehensive federal tax rate increase for the first time in about 30 years since 1993.
In the case of corporate tax, a plan is being reviewed to increase it from 21% to 28%.
Former President Donald Trump lowered the corporate tax rate in 2017 from 35% to 21%, which is raising it again.
In addition, measures to reduce tax exemption for’pass-through companies’, which pay income tax instead of corporate tax by taking corporate profits as the owner’s personal income, and expand the scope of real estate tax are also being promoted.
In the case of personal income tax, a plan to increase the tax rate for high income earners of $400,000 or more per year and those with capital gains of $1 million or more per year is also subject to review.
An analysis has shown that if the tax increase plan is realized during the presidential election, the tax revenues of 2.1 trillion dollars, or up to 4 trillion dollars, will be recovered over the next 10 years.
Bloomberg once promoted tax cuts and cuts under President George W. Bush, but said it was the first time since 1993, during the Bill Clinton administration, that a comprehensive tax increase has been promoted.
The question is whether to pass the parliament.
The opposition Republican Party is in a position to oppose the increase due to concerns about weakening corporate competitiveness.
Instead, the Republican Party is focused on strengthening the tax administration’s enforcement of tax collection.
Some analysts say that if you invest one dollar to enforce the IRS collection, you can earn an additional $3-5 in tax.
Converting fuel taxes to mileage-based fares to help build highways is an item that the Republican Party takes an active attitude.
The Hill, a political media outlet, said Democrats also expressed a somewhat hesitant stance to support the tax increase. Some lawmakers demanded that they postpone the tax rate after the pandemic, while the unemployment rate is high.
Accordingly, it is the deadline for implementing the tax increase before November next year, when the midterm election is scheduled, and it is evaluated that this will be a new test bench for President Biden.
The Washington Post (WP) reported that Treasury Secretary Janet Yellen is pushing ahead with a plan to impose restrictions on the global “bleeding competition,” calling for corporate taxes to be cut.
According to the tax foundation’s analysis, in 1980, the global corporate tax rate averaged 40%, but in 2020 it fell to 23%.
The Organization for Economic Cooperation and Development (OECD) stated that 55 countries with corporate tax rates exceeding 30% in 2000 were less than 20 countries.
There is also an analysis that about 40% of the profits of multinational corporations around the world in 2017 were transferred to tax havens.
The WP said the International Monetary Fund (IMF) and economists say corporate tax cuts have hurt both poor and rich countries.
In the United States, the Trump administration’s tax cuts have resulted in the effective tax rate of Fortune 500 companies dropping from 21% to 11.3%, and 91 companies have not paid any federal tax.
As a result, the WP reported that Yellen aims to reach a principled consensus on the lower limit of corporate tax rates for multinational corporations, even if it is not binding, through the OECD, with more than 140 countries participating.
In fact, during the weeks of his inauguration, Minister Yellen had a conversation with other countries’ finance ministers on the OECD tax treaty. I also gave out.
During a Senate approval hearing, Secretary Yellen said, “A global lower corporate tax limit can stop disruptive competition’going to the bottom'”. “It is necessary for US companies to be internationally competitive, and that is why the OECD negotiations are very important.” .
In this regard, the WP predicts that the OECD is likely to propose a 12% lower corporate tax rate.
However, even if this measure is implemented, the WP said it faces concerns that funds will move to countries that are not affected by the OECD tax treaty and that the United States may make concessions that would undermine its competitiveness in the negotiation process.
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