President Joe Biden might have persuaded some of the world's largest economies to hike taxes on corporations, but the U.S. Congress could be a far tougher sell.
President Joe Biden might have persuaded some of the world's largest economies to hike taxes on corporations, but the U.S. Congress could be a far tougher sell.
A minimum tax is supposed to halt an international race to the bottom for corporate taxation that has led multinational businesses to book their profits in countries with low tax rates. This enables them to avoid taxes and encourages countries to slash rates. The minimum rate would make it tougher for companies to avoid taxes, and could possibly supplant a digital services tax that many European nations are imposing on U.S. tech firms that pay at low rates.
”It has the potential to stop the race to the bottom," said Thornton Matheson, a senior fellow at the Tax Policy Center. "It would be a huge sea change in the way things have been going in corporate taxes for the last three decades.”The idea of an enhanced global minimum tax is also an integral part of Biden's domestic agenda, but it faces resistance in Congress.
“We need to have stable tax systems that raise sufficient revenue to invest in essential public goods and respond to crises and ensure that all citizens and corporations fairly share the burden of financing government,” she said. Senate Republican Leader Mitch McConnell of Kentucky has repeatedly said his party will oppose any measures that undo the 2017 tax cuts signed into law by President Donald Trump.
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