The international corporate tax rate that was agreed upon over the weekend by the Group of 20 major economies will soon face its next hurdle: the United States Congress.
The plan aims to implement a 15% global minimum corporate tax rate. It would also allot increased taxing power to some countries with significant consumer markets, while taking power from some low-tax jurisdiction countries including Ireland.
Treasury Secretary Janet Yellen, who is bullish on the plan that would greatly assist the Biden administration with its goal of raising the U.S. corporate tax rate, said of the agreement, "The world is ready to end the global race to the bottom on corporate taxation, and there's broad consensus about how to do it."
The question for U.S. lawmakers now is how to do it. There are two "pillars" of the global plan, the second being the component that establishes the 15% minimum tax rate. That facet, Yellen believes, can be passed later his year in Congress via budget reconciliation, which would not require Republican support.
The second pillar would make it far easier for the Biden administration to raise corporate taxes on U.S. companies without the fear that they'll move to other area codes, where tax burdens are lower.
Pillar 1 of the plan is the component that allows some countries (mostly European ones) the ability to seize more taxing power, while pulling it away from others.
According to Yellen, the details of that part of the plan "remain to be negotiated," though she is hopeful that legislation could potentially be readied by spring 2022. Tantamount to those negotiations will be whether the legislation needs at least 60 Senate votes to become international law, as the administration desires.