The comprehensive minimum tax deal marked a victory for Yellen. Now she has to sell it to Congress.

She must now navigate more complex negotiations, such as where to set the precise tax rate and how to implement the deal – discussions are expected to begin in Venice on Friday between finance ministers from the Group of 20 major economies. Ms Yellen is also to sell the plan to Capitol Hill, where the support of all Democrats and perhaps some Republicans will be needed to turn the deal into law in the United States.

“Yellen has tremendous expertise, confidence and credibility, so that’s important,” said Tony Fratto, a treasury official in President George W. Bush’s administration. “I think performing it will always be very difficult. “

Ms. Yellen, 74, was chosen to head the Treasury in part because of her background in economic policy and the relationships with policymakers around the world forged during her years as head of the Federal Reserve. But convincing a divided Congress of the merits of the deal may prove to be the biggest test of its diplomatic skills.

A global minimum tax is a key part of the Biden administration’s plans to raise taxes on U.S. businesses to help fund new spending on infrastructure, education and poverty reduction programs. International tax changes could generate nearly $ 1 trillion in revenue over a decade, according to Treasury estimates. But if the United States increases its minimum tax and other countries do not, American companies would be at a disadvantage compared to their rivals in low-tax countries and may seek to shift their profits overseas.

The president’s tax agenda faces stiff opposition from Republicans, who say it will cost jobs and slow economic growth, and even some moderate Democrats, including West Virginia Senator Joe Manchin, are skeptical.

Republicans and business groups are also warning of what will happen if the United States raises the minimum tax but other countries do not follow suit, a situation that could result in an American seat. a significant problem for a business.

“Congressional support … will depend on protecting American workers and the American tax base,” Sen. Mike Crapo (R-Idaho), the top Republican on the finance committee, and Representative Kevin Brady (R-Texas ), her counterpart from the House Ways and Means Committee, wrote in a letter to Ms Yellen on Thursday. “Other countries have shown that they will aggressively seek to gain market share and remove our tax base, so US negotiators must be equally aggressive in defending US interests.”

Ms Yellen has had several discussions with congressional leaders about incorporating minimum tax language into legislation Democrats plan to push forward this year using a process known as reconciliation, which requires a simple majority. in the Senate rather than the 60 votes required for most laws. a senior Treasury official said this week. Yet with the Senate equally divided and Democrats holding a slim majority in the House, the fate of the bill is far from certain.

The deal also includes some provisions that may require changes to international tax treaties, which two-thirds of the Senate must approve. These arrangements were designed to attract bipartisan support, the senior Treasury official said. For example, countries agreed to remove taxes on digital services as part of the deal, something Republicans and Democrats have insisted on for years.

Ms Yellen gained plenty of experience with Congress as Fed chairman, but more often played the defense, battling with Republicans over efforts to take a closer look at central bank policy.

His appointment as head of the Treasury won the support of Republicans and Democrats. But it’s unclear to what extent she can mobilize GOP support for the Biden agenda.

“I respect her a lot,” Rep. Brady told reporters. But he added: “I think there are too many competing interests here for them to finalize a deal that would be acceptable to Congress.”

Years of global tax negotiations reached a dead end in 2019 because of efforts by European countries to grant more tax rights to countries where consumers lived, rather than where the product or service was. invented or made.

This idea, dubbed the First Pillar, would allow them to generate more revenue from tech companies like Apple. Inc.

and Facebook Inc.

But the Trump administration insisted on a provision that would have made certain rules optional for American companies – a lawless for Europe.

Ms. Yellen dropped the US insistence on this provision, relaunched discussions. The Biden administration was more interested in pillar two, the global minimum tax.

In April, the United States presented new proposals on the first pillar that would make it easier to identify which companies would pay the most taxes to consuming countries, a concession that helped persuade Europeans that the United States was serious about conclude an agreement.

Talks resumed last month at a meeting of finance ministers from the Group of Seven rich countries in London. US officials believed that a G-7 deal would create enough momentum to attract major emerging economies such as Brazil, China and India.

Ms Yellen met privately with her counterparts to persuade them that it was in their economic interests to avoid what she called a race to the bottom – rounds of competitive tax cuts to attract investment – and to do so. compromises to reach a deal, said a G-7 official. .

Ms. Yellen had easy relationships with the other participants, according to a Canadian government official. She and Chrystia Freeland from Canada compared their notes on being their country’s first female finance ministers and mixing motherhood and politics, the official said.

“Many deserve credit for maintaining the commitment, but it was her personal, calm and at the same time firm diplomacy that made this happen,” said Kristalina Georgieva, Managing Director of the International Monetary Fund.

On June 5, the G-7 announced an agreement to impose a minimum tax of at least 15% and give countries more powers to tax the profits of digital companies.

After intense lobbying by G-7 officials, 130 countries have adhered to the broad lines of the overhaul. Negotiators expect the deal to gain support from G-20 leaders at their October summit.

Countries then need to start spelling out the technical details of the framework, said Barbara Angus, head of global tax policy at accounting firm Big Four EY and former chief tax advisor to the House Ways and Means Committee.

“It’s really, in some ways, just the end of the beginning,” Ms. Angus said.

—Kim Mackrael and Paul Hannon contributed to this article.

Write to Kate Davidson at [email protected]