Biden and Yellen get 130 countries to back a global minimum tax, including the G20, in historic breakthrough

Janet Yellen testifies before the House Finance Committee
Chip Somodevilla/Getty Images

130 countries have agreed to a global minimum tax, including the G20 and much of the OECD.
The tax would ensure multinational firms they don't flee countries for more favorable rates.
Despite widespread international approval for Janet Yellen's proposal, the GOP hasn't agreed yet.
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A US-backed measure to create wider global tax parity and tamp down on companies moving from one country to another for lower taxes has won widespread international support, according to an OECD press release.

Officials from 130 countries - and all G20 nations - agreed on Thursday to "new two-pillar plan to reform international taxation rules and ensure that multinational enterprises pay a fair share of tax wherever they operate," the OECD said.

The news was first reported by The Wall Street Journal, which noted that some countries that had pushed back against or expressed hesitancy about the measure have come around.

The 130 countries and jurisdictions have have agreed represent over 90% of global GDP, the OECD said, adding that a small group of the 139 members negotiating the tax framework haven't yet agreed. Other details, including implementation, will be finalized in October, it said.

This represents a consequential step forward for a measure that could revolutionize international tax law, and one that is a key part of the agenda for Treasury Secretary Janet Yellen and the Biden administration.

Last month, G7 leaders backed these calls for a 15% global minimum tax as part of a broader push by the Biden administration to create a "fair and inclusive" international economy.

According to the Journal, the countries will now work to implement that rate of at least 15%.

"Today's agreement by 130 countries representing more than 90 percent of global GDP is a clear sign: the race to the bottom is one step closer to coming to an end," Yellen said in a statement, referring to major multinational firms shopping for the lowest international tax rate.

"In its place, America will enter a competition that we can win; one judged on the skill of our workers and the strength of our infrastructure," Yellen said. "We have a chance now to build a global and domestic tax system that lets American workers and businesses compete and win in the world economy."

"After years of intense work and negotiations, this historic package will ensure that large multinational companies pay their fair share of tax everywhere," OECD Secretary-General Mathias Cormann said in the release.

The countries that have agreed to the global minimum will have to implement their own policies at home, something that might prove tricky in the US, as the GOP has signaled it does not support the measure.

"In negotiations with the OECD, the Biden Administration has already given up significant US ground," Rep. Kevin Brady (R-Texas), ranking member of the House Ways and Means Committee, said in a statement, adding that the proposals would favor foreign-headquartered companies and workers over American ones. "This is a dangerous economic surrender that sends U.S. jobs overseas, undermines our economy, and strips away our US tax base."

The push comes as the US contends with potential changes to its own domestic corporate tax rate, which President Joe Biden has pushed to increase to offset infrastructure spending.

"Today is an historic day for economic diplomacy," Yellen said. "For decades, the United States has participated in a self-defeating international tax competition, lowering our corporate tax rates only to watch other nations lower theirs in response. The result was a global race to the bottom: Who could lower their corporate rate further and faster?"

Read the original article on Business Insider