Treasury Secretary Believes Congress Will Pass Global Minimum Tax
Speaking to ABC News on Oct. 10, Yellen said that a proposal to include the United States in the global corporate minimum tax plan would likely be part of the $3.5 trillion budget reconciliation plan that Democrats are trying to ram through Congress.
“Yes. I am confident that what we need to do to come into compliance with the minimum tax will be included in a reconciliation package,” Yellen told ABC. “I hope that we, that it will be passed and we will be able to reassure the world that the United States will do its part.”
On Oct. 8, more than 100 countries agreed to set a minimum global tax rate of 15 percent for big corporations and made it harder for such businesses to avoid taxation. The plan was endorsed by President Joe Biden, who praised the move in a statement released by the White House soon after it was announced.
But Senate Republicans have argued that this would require a new international tax treaty that would require ratification with a two-thirds Senate majority. Republican senators told Yellen in a letter that they were concerned the Biden administration was considering circumventing the need to obtain the Senate’s authority to implement treaties.
Under the Constitution, the Senate must ratify any treaty with a two-thirds majority, or 67 votes. Biden’s fellow Democrats control only 50 seats in the 100-member chamber. Republicans in recent years generally back corporate tax cuts and not raising taxes in general.
Two of the top Republicans on Congress’s tax committees, Rep. Kevin Brady (R-Texas) and Sen. Mike Crapo (R-Idaho), criticized the global corporate tax deal, saying Biden has “used this global forum to advance its short-sighted domestic tax agenda.”
Several weeks ago, Sen. Pat Toomey (R-Pa.), a member of the Senate Banking Committee, said Congress likely wouldn’t ratify the global tax accord because it would require a 67-vote supermajority.
“I think that’s unlikely to happen,” Toomey said in September. “I want to stress, we have for many decades bilateral tax treaties,” Toomey said, although he didn’t say what would happen if it’s included in the reconciliation bill. “Changing those treaties requires ratification in the Senate—there’s no way around that that I can see.”
Also in the interview, Yellen, who previously chaired the Federal Reserve, again called on Congress to raise or suspend the debt limit.
“Fifty million Americans wouldn’t receive Social Security payments. Our troops won’t know when or if they would be paid. The 30 million families that receive a child tax credit, those payments would be in jeopardy,” Yellen said, adding that such a scenario “could result in catastrophe.”
The Senate clinched a deal several days ago that allowed the federal government to increase the debt ceiling by $480 billion, which would push the next deadline to early December. Democrats were able to obtain the help of about 11 GOP senators to overcome the filibuster.
Reuters contributed to this report.