This historic deal will increase incentives to invest in workers and workplaces and ensure that large and profitable corporations do not escape taxation.
Secretary Janet Yellen and the Treasury Department negotiated an end to the global race to the bottom on corporate taxation by establishing a global minimum tax on foreign earnings. Over four decades one country after another, including the United States, played a self-defeating game of trying to win the race by claiming the lowest tax rate to attract and retain businesses, only to see other nations quickly follow suit.
That is the definition of a race to the bottom, and in a race to the bottom, there are no winners. Rather than grow more competitive, the United States saw its tax base erode. Corporate tax collections following the 2017 Tax Cuts and Jobs Act fell to their lowest level since World War II: just 1% of gross domestic product. This left our country unable to invest in the core ingredients of economic growth: infrastructure, education, childcare and research and development.
The deal also marks a significant diplomatic achievement. It is a major step towards reviving U.S. leadership on the international stage. Close and constant consultations on this agreement signaled to partners and allies that a page had turned on a recent period of unpredictable unilateralism. Instead, the Administration embraced multilateral leadership to strengthen the global economy while serving the interests of working American families.
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