Treasury Secretary Janet Yellen said yesterday she was confident the U.S. Congress would approve legislation to implement the global minimum corporate tax agreed to by 136 countries.
Ms Yellen told ABC This week actions to bring the United States into compliance with the global minimum tax would likely be included in the reconciliation budget bill containing the spending initiatives proposed by President Joe Biden. When asked if she was confident the measure would pass, Ms Yellen replied: “Yes. I am confident that what we need to do to comply with the minimum tax will be included in a reconciliation package.
“I hope that it will pass and we can reassure the world that the United States will do its part.
The parliamentary maneuver known as budget reconciliation would allow Democrats to act without Republican votes.
A group of 136 countries on Friday set a minimum global tax rate of 15% for large businesses and sought to make it harder for them to avoid tax in a landmark deal that Mr. Biden, leveled the playing field.
Ms Yellen did not explain how to implement another part of the deal that seeks to reorganize the taxation of large tech companies and other highly profitable multinational companies.
The so-called “pillar 1” part of the tax agreement would reallocate tax rights on companies with annual sales exceeding $ 20 billion (€ 17 billion) to countries where their products and services are are sold for 25% of profits above a 10% margin.
Republicans in the US Senate argued that this would require a new international tax treaty that would require ratification with a two-thirds majority of the Senate.
Republican senators told Ms Yellen in a letter that they feared the Biden administration was considering bypassing the need to gain Senate authority to implement treaties.
Under the Constitution, the Senate must ratify any treaty by a two-thirds majority, i.e. 67 votes. Democrats control just 50 seats in the 100-member chamber. In recent years, Republicans have been overwhelmingly hostile to treaties.
Mrs Yellen said in late September that the administration was instead considering other ways to amend existing bilateral tax treaties that would avoid a two-thirds majority vote.