LONDON -- Treasury Secretary Janet Yellen will try to secure international support this week for a broad agreement that aims to put an end to global tax havens when she makes her first trip as President Joe Biden's top economic diplomat to the Group of 7 finance ministers summit in Britain.
Such a pact has been elusive for years, as countries like Ireland sought to keep taxes as low as possible in order to attract global investment. But the Biden administration has made securing a global minimum tax a priority as it looks to raise corporate taxes domestically to help pay for a sweeping expansion of the nation's infrastructure.
Getting other governments to agree to a global minimum tax is critical to Biden's goal of raising the corporate tax rate in the United States to 28% from 21%. Having a global standard that companies pay regardless of where their headquarters are would help discourage American businesses from simply offshoring their operations or intellectual property to countries with lower tax rates, administration officials contend.
Yellen has said the effort is aimed at ending a "race to the bottom" in which countries cut their tax rates in order to entice companies to move headquarters and profits across borders. Whether she can succeed remains unclear.
Since Biden took office, Yellen has offered concessions to her G-7 counterparts to help propel global talks that have been underway at the Organization for Economic Cooperation and Development, the Paris-based international policy agency that counts the world's wealthiest nations as members.
The G-7 finance ministers will gather on Friday and Saturday in London, and they are expected to produce a joint statement, or communique, on the status of their negotiations at the conclusion of the meeting. So far, Canada, Italy and Japan have signaled their support for a 15% minimum corporate tax plan, but it has not yet been endorsed by Britain.
"I think that the United States has taken on a much more public role in the last few months," said Lilian 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."