Yellen: "Fair Tax Increase Needed to Boost Economic Productivity and Competitiveness"

"Investment in Infrastructure and People Creates Good Jobs"
Mentions the Need for Tax Increase to Support $3 Trillion Infrastructure Investment Plan
Emphasizes International Cooperation to Prevent Corporate Tax Cut Competition

[Image source=Reuters Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min] Janet Yellen, U.S. Treasury Secretary, emphasized that large-scale infrastructure investment will lead to job creation. Secretary Yellen made this remark in response to criticism that the Biden administration's tax increase policy would lead to job losses, expressing a firm commitment to pursue both tax increases and infrastructure investment.

On the 23rd (local time), Secretary Yellen appeared at a hearing held via video conference by the House Financial Services Committee. This was her first appearance before Congress since the Senate confirmation hearing.

Republican lawmakers opposing the Biden administration's tax increase aggressively challenged Secretary Yellen. Reports released a day earlier that the Biden administration is preparing $3 trillion in spending for infrastructure investment further fueled the Republicans' determination.

Republican Representative Roger Williams said, "Cutting taxes increases jobs, and raising taxes causes jobs to disappear," adding, "We need to understand that raising corporate taxes is not good for the economy."

Secretary Yellen did not back down. She highlighted the necessity for the Biden administration to secure funding for infrastructure investment through tax increases, including corporate taxes.

Secretary Yellen responded, "Investment in people and infrastructure will create good jobs for the U.S. economy. Changes in the tax structure will support these programs."

She also reiterated, "It is necessary to increase tax revenue fairly to support spending that enhances the competitiveness and productivity the U.S. economy needs." Her mention of fairness in taxation is interpreted as expressing the view that large corporations and high-income earners who benefited during the COVID-19 pandemic should bear a greater burden.

However, Secretary Yellen also expressed the view that tax increases will not be implemented until the COVID-19 situation ends and will ultimately benefit the economy.

The Biden administration plans to raise the corporate tax rate from 21%, lowered by the Trump administration from 35%, to 28%. It is also pursuing increases in the top individual income tax rate and adjustments to capital gains tax rates for ultra-high earners. U.S. experts evaluate the Biden administration's tax increase policy as the largest in over 30 years.

Secretary Yellen also mentioned the need to block the global trend of corporate tax cuts. She introduced that she is seeking international cooperation with organizations such as the Organization for Economic Cooperation and Development (OECD) to prevent the negative impact of corporate tax cuts in various countries on the U.S. economy. Secretary Yellen emphasized, "I hope to end the international competition to lower corporate tax rates."

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