Home » Economy » G-7 leaders hammer out a global minimum tax for companies. Here's how it would work
G-7 leaders hammer out a global minimum tax for companies. Here's how it would work
Secretary Yellen led push for deal on global minimum tax
Sen. Pat Toomey, R-Penn., calls the Secretary’s plan a ‘terrible deal’ on ‘Kudlow’
President Biden and leaders of the G-7 group of nations formally endorsed a global minimum corporate tax rate on Friday, a landmark agreement that's part of a broader effort to crack down on profit-shifting by multinational companies.
Corporations employ a litany of tactics to reduce their tax liability, often by shifting profits, and revenues, to low-tax countries such as Bermuda, the Cayman Islands or Ireland, regardless of where the sale was made. The practice by American and foreign multinationals costs the U.S. tens of billions of dollars each year, according to the Treasury Department.
By getting all countries to agree to a minimum corporate tax rate, the Biden administration is seeking to eradicate certain tax havens without hurting the competitiveness of American firms. Treasury Secretary Janet Yellen has said a global tax, which would apply to companies' overseas profits, would eliminate what she's described as a "global race to the bottom" in terms of corporate taxes.