Thursday’s proposal comes before a June 4-5 meeting of Group of Seven finance chiefs in London that offer a forum for key industrial nations to forge a consensus.
The Biden administration is also hoping to secure a broad OECD deal on a global minimum rate before Democrats take up the push in Congress to increase U.S. corporate taxes. The White House has proposed a 28% domestic corporate tax rate, up from 21%, to help pay for Biden’s $4 trillion in longer-term economic programs.
Republicans have opposed both the domestic and global tax efforts by the Biden administration, which mark a sharp reversal of President Donald Trump’s policies. Key moderate Democratic Senator Joe Manchin has called for a smaller corporate tax hike.
“It’s really important that Secretary Yellen not give away our tax base in these discussions,” Representative Kevin Brady of Texas, the top Republican on the House Ways and Means Committee, told reporters Thursday. “I worry that her begging other countries to raise their tax rates because America is voluntarily making ourselves uncompetitive.”
The American proposals have also set an objective of ensuring that the world’s 100 or so biggest companies pay more in places where they actually do business. Questions remain over the enforceability of such a move, the dispute resolution and how poorer economies could benefit.
Yellen’s approach has prompted a warmer reception from larger countries who have the most to gain by capturing revenue from global companies operating in lucrative domestic markets. France was among those endorsing the U.S. moves. Other nations that earn money from hosting multinational companies have reservations.
According to the OECD, changes to how taxing rights are allocated could redistribute around $100 billion, while the minimum-tax pillar, combined with existing U.S. rules, would bolster global revenues for governments by as much as $100 billion a year.
—With assistance from Isabel Gottlieb, Yuko Takeo and William Horobin.
This article was provided by Bloomberg News.