President Joe Biden and U.S. Treasury Secretary Janet Yellen are urging Congress to approve an international agreement for a global corporate tax of 15%, raising alarm among key GOP senators of an administration plan to circumvent the Senate's treaty power under the U.S. Constitution.
Some Republicans argue the global tax — on top of other tax hikes proposed by the Biden administration — would destroy American businesses and worsen the U.S. economy.
The global tax is necessary to respond to an "increasingly globalized and digital global economy," its proponents, the Paris-based Organization for Economic Co-operation and Development, an intergovernmental economic organization, argues.
On Friday, 136 countries agreed to implement the plan, which would impact the largest and most profitable multinational companies operating in their countries and around the world. On Saturday, G7 finance ministers met in London and also approved the plan.
The U.K. Treasury has explained the tax proposal, which has two "pillars." Pillar one requires the largest and most profitable multinationals to pay tax in the countries where they operate — not just where their headquarters are located. It applies "to global firms with at least a 10% profit margin — and would see 20% of any profit above the 10% margin subjected to tax in the countries in which they operate. Pillar two creates a minimum 15% global minimum corporation tax operated on a country-by-country basis.
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