130 countries to support the US proposal

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US Treasury Secretary Janet Yellen speaks during a press conference, after attending a meeting of G7 finance ministers, at Winfield House in London, Britain, June 5, 2021.

Justin Thales | Reuters

Treasury Secretary Janet Yellen announced Thursday that a group of 130 countries has agreed to a global minimum corporate tax.

If enacted on a large scale, GMT would effectively end the practice of global corporations seeking low-tax jurisdictions like Ireland and the British Virgin Islands to relocate their headquarters, despite having their customers, operations and executives elsewhere.

“For decades, the United States has engaged in a self-defeating international tax competition, lowering our corporate tax rates only to watch other countries lower their rates in response. The result has been a global race to rock bottom: who can lower their corporate rate the most,” Yellen said in a statement about the agreement. “No country has won this race.”

“Today’s agreement by 130 countries representing more than 90 percent of global GDP is a clear sign: the race to the bottom is one step closer,” Yellen said. “In her place, America will enter a competition we can win; one that is judged on the skill of our workers and the strength of our infrastructure.”

Much of the groundwork for GMT adoption has already been laid by the Organization for Economic Co-operation and Development, or OECD, which released a blueprint last fall outlining a two-pillar approach to international taxation.

The OECD Comprehensive Framework on Base Erosion and Profit Shifting, known as BEPS, is the product of negotiations with 137 countries and member jurisdictions.

Yellen also noted in her Thursday statement that the GMT agreement is a key part of what President Joe Biden has called “middle-class foreign policy.”

The strategy, developed in part by Biden’s National Security Adviser Jake Sullivan, emphasizes how to integrate foreign policy and domestic politics into a new middle ground between traditional conservative and liberal approaches to global affairs.

Middle-class foreign policy aims to ensure that globalization, trade, human rights, and military power are harnessed to the benefit of working Americans, not just for billionaires and multinationals, but not for abstract ideological reasons either.

This is an evolving story, please check back for updates.

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