Yellen insists that Eire take part in international tax transactions

Brussels – The United States Hopes Ireland Will Weaken Its Resistance To Accession Global Tax Deal As Treasury Secretary It Is A Mediator Janet L. Yellen This week she insisted her Irish counterpart that it was an economic benefit to be part of the deal.

During his week-long tour of Europe, Yellen worked to put an end to tax havens and gain support for a global plan aimed at curbing profit shifts through a new global minimum tax. The agreement, approved by a group of 20 countries on Saturday, provides for a minimum global tax of at least 15%. The way tax rights are allocated will also change, allowing countries to collect taxes from large, profitable multinationals based on where they sell their goods and services.

“Low taxes have been an incredibly successful economic strategy for Ireland,” Yellen said in an interview Tuesday before returning to Washington. “They think it is very important to their financial success and I think we will go along, maybe they need to be able to say that it is in the interests of the country. There are. “

This week in Brussels, Jellen held a dedicated conference with Paschal Donohoe, Irish Minister of Finance and Chairman of the Eurogroup, a club of European finance ministers. She needs the help of Mr Donoho as the European Union requires the unanimous consent of Member States to formally participate in the transaction. This requires changes to domestic tax law.

After meeting Yellen on Monday, Donoho went on a positive note and said he would continue to be involved in the process.

Despite growing global support for trade, much work remains to be done.

More than 130 countries support the global consensus framework, which will be the largest international tax reform in decades, but with significant support from Ireland, Hungary and Estonia. Yellen made stops in Venice and Brussels on his first visit to Europe as finance minister and worked with his counterparts to address concerns and reach an agreement so that a final agreement could be signed by October. We have developed a participation strategy.

Jellen told the Irish colleague that the Irish economic model raises the tax rate from 12.5%, but there is still a big gap between that rate and the 21% tax rate on foreign income. Biden administration proposed.

The Byden administration will end the “race to the bottom” corporate tax and usher in a new era of corporate governance that will help countries fund new infrastructure investments and reduce inequality. believe. Improving tax equity could also help accelerate the rise of right-wing populists to power worldwide in a wave of frustration that working-class citizens are being forgotten by the elite.

“Globalization not only helps enrich the rich and harm the poor,” said Yellen. “In a broader sense, international taxation is about that.”

The best economic authorities are examining the complex details of the global tax system and will endeavor to complete them in the months ahead. One of the sensitive questions at the G20 meeting in Venice last weekend was how the tax revenue should be distributed among the largest and most profitable companies worldwide as part of a new tax. That was it.

Daily business briefing

Was updated

July 22, 2021, Eastern Standard Time 6:17 p.m.

Selling contracts in the US can be the most challenging. Parliament is tightly divided, Republicans are determined not to support tax hikes, and the Biden administration has little chance of success, even if it can pass most of the proposed tax reforms with a single Democratic vote.

Republican lawmakers have complained that the United States “wasted” its tax base by allowing other countries to impose new taxes on the company. In some cases, for example, China could collect new tax revenues from American companies that sell products there. However, the United States will likely be able to collect taxes from some Chinese companies operating in the United States. It is not clear whether China will make any net profit from this part of the deal.

Yellen described the world tax as part of a broader economic view that the Biden administration believes is needed to prepare the United States and other countries around the world for future financial needs.

She points to the Biden government’s tax plans as a central element of her approach, including raising the corporate tax rate from 21% to 28%, and the government wants to address what it believes is unfair in US tax law. Specified. ..

“It is not right that very successful companies can avoid paying a fair share to support their investment in the economy, their workforce, and their research and development. And they are operational. “Social safety net,” said Yeren.

Still, opposition from US corporations is mounting as corporations warn that a $ 2 trillion corporate tax hike could make US companies less competitive worldwide. Corporate interests also say tax hikes could boost inflation as US politicians continue to worry about rising prices and businesses turn to consumers.

Jellen rejected the theory, arguing that most economic studies are largely based on past investments and neither harm workers nor accelerate price increases. did.

“There is no reason to believe that changes in corporate tax will have a direct impact on prices,” said Yellen.

Yellen insists that Ireland participate in global tax transactions

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