Adewale Adeyemo, deputy for Treasury Secretary Janet Yellen, said on Wednesday that raising the US corporate tax rate to 28% will not make US companies less competitive, as the Biden administration is confident it can get the backing of developed countries to set a minimum tax worldwide.
“We’ve worked very closely with our international counterparts to counter a race to the bottom in international taxation,” Adeyemo, who goes by Wally, told CNBC’s Sara Eisen.
“We believe that through both of the things we are going to do globally in terms of the G-20, where the United States has made it clear that we are back and we look forward to leading the world, we will be able to reach an agreement that will lead to a minimum tax in the vast majority of developed countries in the world, ”said the second finance minister.
Yellen said on Monday that she was working with the Group of 20 Countries to introduce a minimum corporate tax that prevents companies from moving abroad to find lower rates. President Joe Biden has made raising the US corporate tax rate a central mechanism to fund his massive $ 2 trillion infrastructure plan.
The Republican Party has also broadly opposed the reversal of former President Donald Trump’s 2017 tax cuts, which cut the rate that companies pay on revenue from 35% to 21%. Biden’s plan would not only partially reverse the corporate tax cut, but also scrap other important provisions of Trump’s Tax Cuts and Jobs Act.
The president opened the door on Wednesday to reach a compromise on his proposed corporate tax hike, but said the US must act boldly on infrastructure if it is to keep up with countries like China.
Adeyemo defended the Biden administration’s comprehensive infrastructure plan, saying the US needs investment beyond road and bridge repairs to compete globally in the modern era.
“The investments that the president is calling for in the job package are the same investments that the Chinese are making and other countries,” Adeyemo said. “It’s important we make them now to ensure America can compete in the 21st century.”
He said Biden’s plan and the White House’s broader definition of infrastructure are favored not only by progressive politicians but also by Wall Street executives.
Asked about the criticism that the once-in-a-generation plan is both too big and not targeted enough, Adeyemo pushed back.
“The pandemic has taught us that not only can we think about traditional infrastructure, namely roads, bridges and ports, but we need to think about what it takes to compete in the 21st century, including things like broadband.” Adeyemo said.
“One of the groups most affected by Covid-19 is those who have to provide care to others because they are unable to enter the workforce,” he added. “Some of the investments we are making here are to ensure that those individuals have the support and infrastructure around them to ensure that they can return to the workforce and contribute to the economy.”
Adeyemo’s comments came a week after Biden first presented his long-promised infrastructure proposal in Pittsburgh.
If enacted, the American Jobs Plan would invest hundreds of billions of dollars in transportation infrastructure, water systems, broadband access, power grids, job training and other amenities. It will require $ 400 billion to care for elderly and disabled Americans, and $ 300 billion to build and adapt affordable housing.
Republicans are pretty much united in their opposition to the plan as it is written, deeming the legislation far too extensive in light of the $ 1.9 trillion Covid-19 aid package that Democrats led through Congress earlier this year.
Both Yellen and Adeyemo have made history at the Treasury Department as the first woman to run the agency and the first black assistant secretary, respectively.