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BusinessA Treasury official says an international tax deal would...

A Treasury official says an international tax deal would help make globalization work.

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The Biden administration made its case on Wednesday for why multinational corporations should support an international tax agreement aimed at cracking down on tax shelters, with a top official arguing that the deal would restore order to globalization and blunt the forces of protectionism and populism that have posed a threat to business in recent years.

The comments, by Itai Grinberg, a Treasury Department official who is representing the United States in the negotiations, offered a new rationale for the agreement, which would entail the largest overhaul of the international tax system in decades. If enacted, the deal would usher in a global minimum tax of at least 15 percent and allow countries to impose new taxes on the goods and services of the largest and most profitable corporations regardless of where the companies are based.

But the Biden administration sees the agreement as more than an end to the “race to the bottom” on corporate taxes that has been a boon to tax havens.

“We believe this deal is part and parcel of restoring the foundation for the continued success of the liberal international economic order as we have known it over the last 75 years,” Mr. Grinberg, Treasury’s deputy assistant secretary for multilateral tax, told the National Association for Business Economics.

The Biden administration has been pushing for the agreement as part of its plan to raise taxes on companies in the United States without making them less competitive around the world and to get dozens of countries to drop new digital services taxes that have targeted American technology companies. More than 130 countries have signed on to a framework of the deal, which is being negotiated through the Organization for Economic Cooperation and Development.

Although large companies have been anxious about the prospect of higher taxes, Mr. Grinberg argued that they had more to gain from a tax agreement. He suggested that a lack of clarity and consensus in the international tax system was leading to greater double taxation that, if left unchecked, could cause corporations to pull back cross-border investment.

“The effect of those diminished transactions would spread well beyond big companies and their shareholders, because the activity of multinationals is the backbone of the success of globalization,” Mr. Grinberg said. “And none of that would be good, because although it certainly has its flaws, globalization has brought benefits not just for multinational corporations but for people in the United States and around the world.”

The Biden administration has argued that its international tax proposals would bring more fairness to the United States and to economies around the world. They would do so, it says, by putting an end to a system that allows corporations to pay less tax than middle-class workers and by giving nations more tax revenue that they could spend on infrastructure and other public goods. Mr. Grinberg said this would be in the interest of corporations, arguing that the sense of unfairness was creating a landscape that is problematic for global businesses.

“Could globally engaged multinational business succeed if economic populism, protectionism and anti-immigrant sentiment were to become the order of the political day?” he said.

Much remains to be done between now and October, when international negotiators hope to complete the pact. Ireland, Estonia and Hungary have yet to join the agreement, and their resistance could block the European Union from moving ahead with the plan.

The Biden administration hopes that Congress will approve its proposed changes to the U.S. global minimum tax this year and that it will consider the proposal to allow other countries to tax America’s large multinational companies next year, after technical work on that plan is completed.

The tax negotiations have been a top priority for Janet L. Yellen during her first year as Treasury secretary. Mr. Grinberg has been working closely with Rebecca Kysar, another Treasury official, to shape the agreement and represent the United States in the talks.

In his remarks, Mr. Grinberg said it was important to ensure that the agreement included a dispute resolution system and a mechanism to make sure it was binding.

“Getting it right will be an essential part of encapsulating this deal in a multilateral convention,” he said.



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