In the midst of the US election campaign, the Biden administration is leading an offensive against tax evasion by large companies. The Treasury Department, the equivalent of the Ministry of Finance, wants to impose a minimum tax of 15% on American companies that generate more than a billion dollars in profit per year. An initiative that should bring in 250 billion dollars over ten years.
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For the White House, it is time to force big companies to pay their fair share. About a hundred American companies are concerned. The Treasury Department refuses to name them, but assures that more than half of them pay less than 1% in taxes. The executive speaks of a tax injustice that strongly disadvantages small businesses.
With this measure, an additional 20 billion dollars will enter the state coffers from 2025. It is part of President Joe Biden’s major climate law, the Inflation Reduction Act adopted in 2022. But the rule had not yet been applied.
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The 600-page text published on Thursday, September 12, gives details of the application of this text adopted two years ago by the American Congress. It is ” an important step toward realizing Congress’ efforts to crack down on corporate tax avoidance and ensure that the nation’s largest and most profitable companies cannot pay little or no tax “, said US Treasury Secretary Janet Yellen in a statement.
Context of the fight against tax injustice
This is to prevent these companies from using tax loopholes that have allowed them to pay much less than the theoretical rate. The Treasury has specified that, without this measure, they would have ” paid an average effective federal tax rate of 2.6% “, even less than 1% for 60% of the hundred or so companies concerned.
The Democratic camp took advantage of this to attack Donald Trump on its 2017 tax reform, which reduced the corporate tax rate. According to the White House economic adviser, the Republican initiative opened the door to tax evasion in the United States.
This American measure comes in a global context of fight against tax injustice. In 2021, 140 countries, including the United States, had signed an international agreement coordinated by the OECD with the objective of imposing a minimum tax of 15% on multinationals before 2024.