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Yellen Aims to Win Support for Global Tax Deal


Ireland has been one of the most vocal critics of the Biden proposal. Its 12.5 percent corporate tax rate has helped fuel the so-called Celtic Tiger economy since the 1990s, luring Google, Facebook and other corporate giants to establish European beachheads in Dublin, creating jobs and greatly enriching the Irish treasury.

Paschal Donohoe, Ireland’s finance minister, has said Dublin wants “acceptable tax competition” between countries to continue.

“I believe that small countries, and Ireland is one of them, need to be able to use tax policy as a legitimate lever to compensate for the advantages of scale, location, resources, industrial heritage, and the real material and persistent advantage that is sometimes enjoyed by larger countries,” he said during a virtual summit meeting in April.

In Hungary, where the corporate tax rate is 9 percent, the government of Viktor Orban has said setting a higher rate would be unfair, and that countries have the right to make sovereign decisions on taxes. The Czech Finance Ministry has said tax harmonization set by the United States would mean an increase in the corporate tax rate for Czech companies.

The negotiations over the global minimum tax are part of a broader fight over how to tax technology companies and build on talks that were underway during the Trump administration. The pace of the negotiations have accelerated this year after the Biden administration stepped up its diplomatic efforts with traditional American allies and offered some new proposals that European countries found more palatable than what Ms. Yellen’s predecessor Steven Mnuchin supported.

“I think that the United States has taken on a much more public role in the last few months,” said Lilian V. Faulhaber, a professor at Georgetown University Law Center, adding that this week’s talks would be an indicator of whether recent signs of progress were real. “Up until now, countries have been able to express general support without really putting their money where their mouth is.”

Ms. Yellen’s proposal on the minimum tax stoked elation in France, Germany and other high-tax European countries that have agitated for what they say is an urgently needed tax revolution at a time when digital giants like Facebook and Amazon have become as wealthy and powerful as sovereign states.



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