(The Center Square) – Ahead of the G-7 summit in the United Kingdom, a recently announced agreement for a global minimum corporate tax between the Biden administration and six other leading world economies is facing sharp opposition from Republicans in the U.S.
Treasury Secretary Janet Yellen, with finance ministers from Canada, France, Germany, Italy, Japan and the United Kingdom, announced a framework for a global minimum tax on corporations of at least 15%. The tax would not be dependent on where the corporation is located and also includes provisions to reallocate profits from large corporations to countries where said company’s services are used.
At a news conference following the G-7 Finance Ministers meetings on Saturday, Yellen expressed optimism about the broad agreement between the nations.
“For too long, there has been a global race-to-the-bottom in corporate tax rates – where countries compete by lowering their tax rates instead of the well-being of their citizens and natural environments,” Yellen said. “The G-7 has taken significant steps this weekend to end the existing harmful dynamic, making commitments today that provide tremendous momentum towards achieving a robust global minimum tax at a rate of at least 15%.
This agreement between G-7 nations to raise corporate tax rates is on the heels of President Joe Biden’s proposals to raise the corporate tax rate domestically to 28%.
Yellen reiterated the domestic proposal in the American Jobs Plan for a minimum corporate tax remains at 28%, a percentage also widely criticized as uncompetitive. She also made clear the broad 15% rate agreed upon was not the final rate and could still be raised.
The new agreement would likely have negative implications for multi-national technology companies, such as Facebook and Apple, who would pay more taxes overall.
Critics of the agreement have said a minimum corporate tax rate among the G-7 nations could allow nations not part of the agreement, like Ireland and other European nations not in the G-7, to undercut the 15% corporate tax rates and drive corporations to non-G-7 countries.
Domestically, Republicans have been strongly opposed to raising corporate tax rates and are attempting to protect Trump-era tax cuts. The GOP has also expressed opposition to this agreement between Yellen and the other G-7 nations.
Monday in an interview with Larry Kudlow on Fox Business Network, Sen. Pat Toomey forcefully rejected the global minimum corporate tax proposal.
“This is a terrible idea,” Toomey said. “They characterize competition for economic freedom as a ‘race to the bottom', we should be winning that race, they want make sure this race doesn’t even happen.”
Toomey also made clear that no Republican senator would support the increased corporate tax proposal in the Senate.
“There will be no Republican support for this and they’ll have to do this on a party-line vote,” Toomey said.
Sen. John Barrasso, chair of the Senate Republican Conference, also rejected the agreement when talking to reporters at the Capitol. Barrasso slammed the agreement as “anti-competitive” and “anti-U.S.” among other criticisms.
The sharp opposition by Republicans comes as negotiations between the White House and GOP senators over an infrastructure package have reportedly hit a road-block.