Promote a comprehensive federal tax rate increase
For income tax of 400,000 dollars or more per year
“Blocking multinational corporations to avoid taxation”
Promotion of global corporate tax lower limit
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As U.S. President Joe Biden made a pledge during the presidential election, he will start to raise taxes and increase corporate taxes in earnest.
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 more than 30 years since 1993. This is the first time since 1993, during the Bill Clinton administration, that a comprehensive tax increase plan has been promoted.
First of all, we will consider raising the current 21% to 28%. Former President Donald Trump lowered the corporate tax rate in 2017 from 35% to 21%, but he said he would raise it again by half of the cut.
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In addition, a plan is being promoted to reduce the tax exemption for’pass-through companies’ that pay income tax instead of corporate tax by catching corporate income as the owner’s personal income and expand the scope of real estate tax.
Personal income tax is subject to increase for the wealthy. Consider raising the tax rate for high income earners with an annual income of more than $400,000 and capital gains of more than $1 million per year. According to Reuters, White House spokesman Jen Saki stressed that “we are concentrating on our pledge to not increase tax for those with an annual income of less than $400,000.”
This plan is based on President Biden’s election pledge. At the time, an analysis was raised that if the biden mark tax increase plan is realized, the tax revenue will increase by 2.1 trillion dollars over the next 10 years. Some estimates will reach up to $4 trillion.
The problem is that considerable pain is expected for parliamentary passage. The Republican Party is opposed to concerns over weakening corporate competitiveness. Instead, I think it would be better to strengthen the enforcement of the collection by the National Tax Service.
Considering the topography of the parliament, it is the deadline for implementing the tax increase before November next year. For this reason, there is also an estimate that this will be a test of Biden’s political power. The Washington Post (WP) reported that finance minister Janet Yellen is pushing ahead with a plan to impose restrictions on the global “bleeding competition” to cut corporate taxes with a commission. This is because multinational companies are avoiding taxes by shifting their profits to tax havens or places where corporate taxes are low.
Minister Yellen said that through the Organization for Economic Cooperation and Development (OECD), which participates in more than 140 countries, he aims to reach a principle agreement on the lower limit of corporate tax rates for multinational corporations, even if they are not binding.
The OECD is likely to offer a 12% lower limit for corporate tax rates, the WP reported. However, even if this measure is implemented, there remains a concern that funds will be transferred to countries that are not affected by the OECD tax treaty, the WP said.
Former Treasury Secretary Larry Summers said, “Is the US goal to win the corporate tax floor competition or end the competition?” “I am encouraged by Secretary Yellen’s initial signals.”
/ Reporter Maeng Joon-ho [email protected]
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