Itai Grinberg and Rebecca Kysar, the Treasury officials who have been leading the global negotiations for the United States, argued in an essay last week that with a rate of 21 percent, “jobs and investment can flourish in the United States.”
After a virtual meeting with her counterparts of the Group of 7 nations last week, Treasury Secretary Janet L. Yellen said the higher rate would “generate funding for a sustained increase in critical investments in education, research and clean energy.”
More details about those plans are expected to be unveiled in early and mid-October. However, it is not clear how and when the United States would enact that part of the agreement, known as Pillar 1, and there are lingering concerns among business groups and Republican that American companies would bear the brunt of the new taxes.
The October deadline is self-imposed, and it could be pushed back. Countries have set a goal of fully activating the agreement by 2023, as it will take time for countries to change their tax laws.
The House proposal, laid out by Democrats on the Ways and Means Committee, could still undergo substantial changes before a final vote. Ultimately it will have to be melded with a proposal by Senate Democrats, who have yet to settle on a tax rate for corporate foreign earnings.
Manal Corwin, a Treasury official in the Obama administration who now heads the Washington national tax practice at KPMG, said it was possible that the rate could still inch higher despite pushback from companies.
“You never know how these things play out when they need more revenue,” Ms. Corwin said.
Any changes could come in tandem with adjustments to the House Democrats’ proposal for the domestic corporate tax rates. Despite Mr. Biden’s call for 28 percent, the House has proposed a graduated structure, ranging from 18 percent for the smallest businesses, with income below $400,000, to 26.5 percent for companies with taxable income above $5 million.