Leaders of the world’s largest economies are endorsing the establishment of a global minimum tax at the opening of the Group of 20 (G-20) summit in Rome on Saturday.
The global minimum tax seeks to block corporations from moving jobs or profits overseas in order to avoid paying taxes. President BidenJoe BidenNorth Korea conducts potential 6th missile test in a month Clyburn predicts Supreme Court contender J. Michelle Childs would get GOP votes Overnight Defense & National Security — US delivers written response to Russia MORE and his administration pushed the agreement over the finish line in the last several months.
“We reached a historic agreement for a fairer and more effective international tax system,” Italian Prime Minister Mario Draghi said at the opening of the summit on Saturday.
The agreement would set a 15 percent global minimum corporate tax rate that administration officials say would generate $60 billion or more in additional revenue annually in the U.S. alone.
“The deal works because it removes the incentives for the offshoring of American jobs, it's going to help small businesses compete on a level playing field, and it's going to give us more resources to invest in our people at home,” a senior administration official told reporters on a call previewing the announcement.
"It's a game changer for American workers, taxpayers and businesses," the senior official added. "And in our judgment, this is more than just a tax deal; it's a reshaping of the rules of the global economy."
The corporate minimum tax has gained support from Democrats in Congress, and Biden has included it in his framework for a sweeping $1.75 trillion climate and social spending bill as a revenue raiser. The bill still needs to pass through Congress, however; Biden had hoped to see movement on it before he left for Europe but fell short.
The global minimum tax had been agreed to by G-20 finance ministers earlier this year, but Saturday’s session represents the first time that the leaders of the countries will endorse the agreement. The announcement was expected but nevertheless represented a significant development.
The Organization for Economic Cooperation Development announced earlier this month that 136 countries had signed on to the global minimum corporate tax framework. The minimum tax will apply to corporations that have revenue exceeding 750 million euros and is estimated to raise $150 billion annually in revenue.
In endorsing the deal on Saturday, the G-20 leaders are committing to implementing the agreement by 2023.
Treasury Secretary Janet YellenJanet YellenYellen says Biden's COVID-19 relief bill 'acted like a vaccine for the American economy' On the Money — Yellen highlights wealth gap in MLK speech Yellen: US has 'much more work' to close racial wealth gap MORE commended the "historic" agreement in a statement issued later Saturday.
"This deal will remake the global economy into a more prosperous place for American business & workers," Yellen said. "Rather than competing on our ability to offer lower rates, America will now compete on the skills of our people, our ideas, & our capacity to innovate — which is a race we can win."
After the first plenary wrapped, a senior administration official said that Biden "emphasized the importance of this historic deal during his intervention" and underscored that the countries can tackle shared interests despite other disagreements.
The meeting also touched on the coronavirus pandemic and energy markets.
"The President underscored his commitment to ending the global pandemic and securing an inclusive global economic recovery, including by supporting developing countries through debt relief and strengthening reallocation of SDRs," the senior official said. "He reminded G20 Leaders that new pandemics can arise any time so it is important that we strengthen global health systems and do more to create the global health security infrastructure to make sure we are prepared against the next pandemic."
"The President stressed the need for balanced, well supplied, and competitive global energy markets so we don’t undermine this critical moment of economic recovery," the senior official said.
Updated at 11:39 a.m.