Yellen’s Global Tax Gets Opposition
By The Editorial Board June 19, 2023 5:08 pm ET Treasury Secretary Janet Yellen Photo: Kevin Dietsch/Getty Images House Republicans recently warned governments around the world that Washington is far from united in supporting a new global corporate tax grab. Message received, as some lawmakers in the United Kingdom and elsewhere develop cold feet about the plan, despite U.S. Treasury Secretary Janet Yellen’s high-tax evangelism. Priti Patel, a prominent member of the British parliament from the ruling Conservative Party, this weekend launched a revolt against her own Prime Minister’s plan to adopt the global taxes. This is the proposal cooked up at the Organization for Economic Cooperation and Development to levy an excess-profits tax aimed at tech and pharma
Treasury Secretary Janet Yellen
Photo: Kevin Dietsch/Getty Images
House Republicans recently warned governments around the world that Washington is far from united in supporting a new global corporate tax grab. Message received, as some lawmakers in the United Kingdom and elsewhere develop cold feet about the plan, despite U.S. Treasury Secretary Janet Yellen’s high-tax evangelism.
Priti Patel, a prominent member of the British parliament from the ruling Conservative Party, this weekend launched a revolt against her own Prime Minister’s plan to adopt the global taxes. This is the proposal cooked up at the Organization for Economic Cooperation and Development to levy an excess-profits tax aimed at tech and pharma companies while also imposing a minimum effective corporate tax rate of 15% globally.
Ms. Yellen signed up for this because the Biden Administration hoped it would pressure Congress to raise U.S. tax rates. Foreign governments such as U.K. Prime Minister Rishi Sunak’s administration seized the chance to grab more revenue without fear of policy competition.
But now other governments are starting to notice that the U.S. Congress isn’t following Ms. Yellen. The excess-profits tax would require the Senate to ratify changes to existing tax treaties, which is unlikely. Republicans on the House Ways and Means Committee have introduced a bill threatening tax retaliation against governments that impose key parts of the 15% minimum tax on U.S. companies, as we recently reported.
Ms. Patel cites the GOP opposition as a reason to slow or stop the global-tax implementation in Britain. She’s also astute to note that the OECD is taking aim at governments that try to boost business by cutting taxes, while blessing governments that offer subsidies even when the subsidy comes dressed as a tax credit.
The European Union has also given some governments up to six years to implement the agreement, if they ever do. Singapore and Hong Kong are dragging their feet, implementing the minimum tax in 2025 at the earliest, a year after the OECD’s target date. Swiss voters backed the plan in a referendum this weekend, but they look like outliers.
Congress is right to be skeptical of Ms. Yellen’s attempt to use the OECD plan to railroad lawmakers into tax increases that will make U.S. firms less competitive. They’re not the only skeptics about this global tax grab.
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