US Raises Corporate Tax to 28%... Concerns Over Global Domino Effect Increase

Promotion of Raising the International Minimum Corporate Tax Rate

[Image source=Reuters Yonhap News]

[Asia Economy New York=Correspondent Baek Jong-min, Reporter Kim Hyun-jung] U.S. President Joe Biden has announced plans to raise taxes, including increasing the corporate tax rate, to fund a $2.25 trillion infrastructure investment plan. The White House maintains that there will be no problem securing investment funds through increased tax revenues over the next 15 years, but controversy is inevitable during the legislative process. In particular, the proposal to raise the global minimum corporate tax rate to 21% is expected to have ripple effects not only in Korea but also across the global economy.

On the 31st (local time), President Biden announced the infrastructure investment plan in Pittsburgh, mentioning the corporate tax hike policy along with the issue of tax avoidance by large corporations.

President Biden stated that he would raise the corporate tax rate to 28%. Regarding the tax increase, he said, "Today, I propose a national plan that rewards labor, not wealth," adding, "We will build a fair economy that gives everyone a chance to succeed."

President Biden pointed out that 91 of the Fortune 500 companies are avoiding taxes by exploiting loopholes, mentioning Amazon by name. He emphasized the unfairness in taxation between large corporations and individuals, saying, "Teachers and firefighters are taxed at a 22% rate."

President Biden also expressed his intention to standardize corporate tax rates among countries by raising the global minimum corporate tax rate from 13% to 21%. This is interpreted as a measure to address the potential decline in international competitiveness of U.S. companies due to the corporate tax increase.

U.S. Treasury Secretary Janet Yellen has recently been negotiating with the Organization for Economic Cooperation and Development (OECD) and various countries to raise the minimum tax rate. After former President Donald Trump lowered the U.S. corporate tax rate from 35% to 21%, a global competition to reduce corporate tax rates ensued, lowering the average corporate tax rate among OECD member countries to around 24%.

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