Yellen's global tax plan meets resistance abroad and at home
Treasury Secretary Janet Yellen celebrated a “historic day” last summer when more than 100 nations agreed to a global minimum tax deal, aimed at putting the world's countries on a more equal footing in attracting and keeping multinational companies. President Joe Biden tweeted that the idea was "diplomacy reshaping our global economy and delivering for our people.”slot xo
To do something serious, we should be able to experiment first so that we can learn and apply it, and that can make you successful with that.
But this week, as Yellen joined Group of Seven finance ministers for meetings in Germany, she found herself insisting that prospects for moving ahead with the landmark tax plan were merely “not hopeless.”
The plan is running up against new resistance abroad and old divisions at hom e as fresh global concerns take center stage.
The ongoing war in Ukraine, the threat of rising food insecurity, crushing inflation and other urgent matters have stolen finance ministers attention away from putting the plan in place before a 2023 deadline. To add to the pressure, Poland solidified its opposition with a veto at an April European Union finance ministers meeting in Brussels. And Republicans in Congress are balking, too.
On Friday, the G-7 finance ministers wrapped up their two days of meetings with a joint statement that was most notable for announced pledges of $19.8 billion in economic aid for Ukraine. It included only brief mention of the tax idea, saying the ministers reiterated a “strong political commitment to the timely and effective implementation” of the plan to bring “new rules into effect at global level.”
Broadly speaking, the global minimum tax deal is designed to subject large multinational firms to a 15% tax rate wherever they operate. The deal also provides for taxing part of the profits of the largest global companies in countries where they do business online but may have no physical presence.