New Tax Rate on Major US Businesses Abroad Will Help Americans at Home, Says Yellen | Janet Yellen
Treasury Secretary Janet Yellen said U.S. multinationals that have spent years avoiding paying taxes on U.S. soil will be forced to help fund improvements in education, social and infrastructure programs, through to the historic global tax agreement.
Speaking in Ireland, where 800 American companies are based, Yellen said the new global tax rate agreed by 136 OECD countries has ended the “race to the bottom” in which multinationals have traveled the world. for the lowest corporate tax rate, without paying their dues to the people who have helped them make billions in profits every year.
Joe Biden’s $ 1.75 Billion Build Back Better plan “is spread over a decade and paid for by increasing income, without taxing working families … but partly because of it [OECD] tax deal asking businesses to pay more, by businesses that are very profitable and can afford to contribute revenues ”.
She said the United States “needs to invest in people,” especially in education, infrastructure and broadband, telling at an event in Dublin that America’s roads and bridges are falling apart. were collapsing and that the lack of broadband access had also hit many families hard during the pandemic. .
Some were forced to “go to a parking lot outside McDonald’s so their children can do their homework and have access to the Internet,” she said.
She said: “I am proud of the new international tax agreement, because it not only offers benefits to ordinary families, but it will also stabilize the century-old international tax system.”
Yellen used the Institute for International and European Affairs in Dublin to praise Ireland – an implicit thank you for finally giving in to pressure from the United States to raise its corporate tax rate by 12.5 % and join the OECD rate of 15%.
She added: “It is important to note that the deal ends the chaotic array of taxes on digital services that discriminate against Irish and American businesses.
The Irish economy relies heavily on American businesses. Sources recently claimed in interviews with the Guardian that Microsoft, Apple and Pfizer are responsible for 30% of the country’s total corporate tax – the equivalent of around $ 4 billion.
While all three of these companies have a strong investment in the country and, in Pfizer’s case, a substantial manufacturing base, they now have to pay additional taxes in their countries under the new global tax regime.
Tax evasion schemes such as the ‘Dutch Irish Double Sandwich’ which have allowed companies like Google to funnel their huge revenues from Europe through Ireland and to zero offshore tax havens in the Caribbean, are now banned.
Yellen said on Monday that Ireland would remain one of the best places in the world for multinational companies to invest in, even after Dublin gave up its 12.5% rate.
She said while some saw Ireland as a tax haven, “perception is often lagging behind reality” and Ireland “was already winning this new race to the top, with its robust business environment”.
Yellen said: “Here is my honest assessment of what it won’t do: it won’t change this country’s status as one of the best places to do business in the world.”