Joe Biden’s US administration is pushing ahead with a plan to set a lower limit on corporate tax rates in major countries for multinational corporations through an Organization for Economic Cooperation and Development (OECD) agreement. The Biden government has announced that it will raise the current 21% corporate tax rate to 28% as a result of the presidential election pledge. If the US raises the corporate tax rate, it is a plan to create a kind of’safety device’ because there is a concern about capital outflows such as the departure of multinational corporations.
The Washington Post (WP) reported on the 15th (local time) that “while the White House is pushing for tax revenue expansion, Treasury Secretary Janet Yellen is pushing for an agreement on the global minimum tax rate for multinational companies.” This means that Minister Yellen has already begun discussions with the finance ministers of major European countries.
The Biden administration is facing a situation where the federal government’s expenditure is rapidly expanding, with the recent $1.9 trillion of economic stimulus budget passed through Congress, while tax revenues are facing a situation that rather declines due to the recession caused by Corona 19 and various refund measures. Therefore, it is necessary to promote corporate tax and income tax increase plans for high income people early for fiscal stability, but some of the opposition Republicans as well as the Democratic Party are voicing against the hasty tax increase.
Among these, the top priority of the Biden government’s tax increase is corporate tax. The former administration of Donald Trump lowered the corporate tax from 35% after taking office to 21%.
As a result, the WP said the effective tax rate of Fortune 500 companies fell to 11.3%, and that 91 large corporations did not pay any taxes to the federal government.
The average corporate tax rate in OECD member countries has dropped to 24% as many major countries, as well as the United States, have entered the competition for corporate tax cuts. In the case of OECD member countries, when comparing 2010 and 2020, 21 countries including the United States and the United Kingdom chose a cut, and eight countries, including Germany and Korea, chose an increase. Last year alone, nine countries, including France, cut corporate taxes.
However, in response to the reduction in tax revenues caused by Corona 19, the UK government announced that it will raise the corporate tax rate, which was recently 19%, to a maximum of 25% in 2023. The US is also turning the rudder by raising the corporate tax rate following the regime change.
Minister Yellen notes that although there are 37 OECD member countries, more than 140 countries are participating in tax-related agreements. Even if it is not possible to enforce legal binding force, it is judged that if major countries agree to set the minimum corporate tax rate, multinational corporations will not be able to intimidate certain countries. There is also a possibility that the Biden government will raise the corporate tax issue in earnest in exchange for withdrawing opposition to the introduction of digital tax that the European Union has promoted. However, the WP said there were skepticism that such a plan would be difficult to reach an agreement.
Meanwhile, President Joe Biden held a press conference in line with the enforcement of the economic stimulus bill and promised, “In the next 10 days, we will complete 100 million vaccinations and put 100 million checks (cash aid) in the pockets of the people.”
[워싱턴 = 신헌철 특파원]
[ⓒ 매일경제 & mk.co.kr, 무단전재 및 재배포 금지]