Yellen: "Global Minimum Corporate Tax Rate Must Increase"... New York State Supports 'Wealth Tax'

Biden Infrastructure Investment Funding
Tax Increase Discussions Expand to State Governments
New York State Raises Top Tax Rate to 14.8% for High Earners Making Over $1 Million Annually

▲Janet Yellen, U.S. Secretary of the Treasury [Image source=Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] As the Biden administration in the United States is pushing to raise the corporate tax rate to aid economic recovery, Janet Yellen, U.S. Treasury Secretary, has emphasized the need to introduce a global minimum corporate tax targeting multinational corporations. New York State, the first among state governments to propose a ‘wealth tax’ card, is expanding tax increase discussions to cover the fiscal deterioration caused by the COVID-19 pandemic.

On the 5th (local time), Secretary Yellen attended the Chicago Council on Global Affairs (CCGA) and said, "The global economy has driven corporate tax rates down to rock bottom over the past 30 years," adding, "Now, through a global minimum corporate tax rate on multinational corporations, the world economy can prosper in a fairer competitive environment." She also mentioned cooperating with the Group of Twenty (G20) to implement this.

The ‘global minimum corporate tax rate’ mentioned by Secretary Yellen emerged as the Biden administration announced a $2 trillion (approximately 2,300 trillion KRW) infrastructure investment plan and is pushing to raise the corporate tax rate from the current 21% to 28% to secure funding. So far, countries like Ireland and Luxembourg have attracted multinational corporations with low corporate tax rates, but the Biden administration aims to pressure such countries to raise their rates to the U.S. level.

Tax increase discussions have also ignited at the state government level. According to Bloomberg and The New York Times (NYT) on the same day, the New York State Legislature has tentatively agreed on a tax increase plan to collect $4.3 billion (approximately 4.8319 trillion KRW) annually from high-income earners and corporations to secure insufficient tax revenue. Both the New York State Senate and Assembly have more than two-thirds Democratic members, so this tax increase plan is expected to pass without difficulty. It is scheduled to be announced as early as Monday the 12th.

If approved, individuals earning an annual income of $1 million (approximately 1.1 billion KRW) or couples with a combined annual income of $2 million or more will see their income tax rate temporarily rise from the current 8.82% to 9.65%.

Additionally, new tax brackets will be established for ultra-high-income earners earning between $5 million and $25 million annually, and those earning over $25 million, with income tax rates of 10.3% and 10.9% respectively, effective until 2027. Furthermore, New York City residents are separately subject to a top income tax rate of 3.88%, which combined means paying about 13.5% to 14.8% of total income to New York State. This exceeds California’s top tax rate of 13.3%, which boasts the highest tax rate nationwide.

High-income earners with annual incomes over $400,000 must also pay up to 37% income tax to the federal government, separate from New York State taxes. New York State is also reportedly planning to raise its corporate tax rate from the current 6.5% to 7.25%.

Starting with New York State, other states may also propose additional tax increase plans. The California State Legislature has begun discussions on introducing a wealth tax on high-income earners, and in Minnesota, the governor recently proposed establishing new tax brackets imposing the highest tax rates. The Washington State Senate passed a tax bill last month imposing a 7% tax on capital income over $250,000.

This content was produced with the assistance of AI translation services.