President Biden and other world leaders endorsed a landmark global agreement on Saturday that seeks to block large corporations from shifting profits and jobs across borders to avoid taxes, a showcase win for a President who has found raising corporate tax rates an easier sell with other countries than with his own party in Congress.
The announcement in the opening session of the Group of 20 summit marked the world’s most aggressive attempt yet to stop opportunistic companies like Apple and Bristol Myers Squibb from sheltering profits in so-called tax havens, where tax rates are low and corporations often maintain little physical presence beyond an official headquarters.
It is a deal years in the making, which was pushed over the line by the sustained efforts of Biden’s treasury department, even as the President’s plans to raise taxes in the US for new social policy and climate change programmes have fallen short of his promises.
The revenue expected from the international pact is now critical to Biden’s domestic agenda, an unexpected outcome for a President who has presented himself more as a deal maker at home rather than abroad.
Leaders hailed the agreement, which was negotiated by the Organisation for Economic Cooperation and Development with nearly 140 countries signing on. It would impose a minimum 15 per cent corporate tax rate in nearly every country in the world and punish the few holdouts who refuse to go along. The OECD estimates the accord will raise $150 billion per year globally from tax-fleeing companies.
“We reached a historic agreement for a fairer and more equitable tax system,” Prime Minister Mario Draghi of Italy said in remarks opening the first session of the summit. Other leaders, including Biden, were expected to offer similarly effusive praise for the change.
The Group of 20 leaders are expected to formally endorse the global tax agreement in their official communiqué that is set to be released when the summit concludes on Sunday, Biden administration .
Such an agreement was not the top tax promise on Biden’s campaign agenda when he won the White House. But it has become the centrepiece of Biden’s efforts to raise corporate taxes back home, in order to fund a sprawling domestic agenda that includes investing in child care and fighting climate change, and to shift the global balance of power towards American workers .