The International Monetary Fund (IMF) says it backs a U.S. proposal for a global minimum corporate tax.
IMF Chief Economist Gita Gopinath said that the fund has been calling for international cooperation on tax policy “for a long time,” adding that different corporate tax rates around the world have fueled tax shifting and avoidance.
“That reduces the revenues that governments collect to do the needed social and economic spending,” Gopinath told Yahoo Finance Tuesday. “We’re very much in support of having this kind of global minimum corporate tax.”
Gopinath’s remarks are likely to add momentum to U.S. Treasury Secretary Janet Yellen’s efforts to start an international dialogue on a new framework. The European Commission on Tuesday also said it supported discussions, but said the ultimate rate should be deliberated through the Organisation for Economic Cooperation and Development (OECD).
Yellen recently called on the 20 largest economies to work together to “stop the race to the bottom” by setting a new minimum that would allow governments more stability in collecting tax revenue. The Biden administration is targeting a 21% global minimum tax for U.S. multinational corporations.
“It is important to work with other countries to end the pressures of tax competition and corporate tax base erosion,” Yellen said in a speech Monday.
Yellen is among the many finance ministers and central bank governors that will be convening virtually this week as part of the IMF’s annual spring meetings.
Gopinath also backed Yellen’s push forward on an aggressive infrastructure bill, as the Biden administration continues to work through a $2 trillion plan to overhaul American roads and highways, expand high-speed broadband access, and build a more resilient electric grid.
As the IMF continues to encourage countries with fiscal room to continue spending through the recovery, its chief economist said investment into infrastructure is one way to boost economic activity.
“This package serves that purpose in terms of climate mitigation, improving roads and bridges, all of which raise productivity and have a positive effect on the economy,” Gopinath said.
Brian Cheung is a reporter covering the Fed, economics, and banking for Yahoo Finance. You can follow him on Twitter @bcheungz.