According to the Tax Foundation, the Trump administration’s corporate tax reduction lowered the US rate from the highest among the 37 advanced economies in the Organisation for Economic Cooperation and Development to the 13th highest. Many analysts have argued, however, that few large US multinationals paid the full tax.
“We have 51 or 52 corporations from the Fortune 500 who haven’t paid a single penny a day for three years?” Biden said. “Come on.”
Playing down inflation fears
Yellen, meanwhile, downplayed the potential for the Biden administration’s domestic agenda, which also includes a $US1.9 trillion COVID relief package approved last month, to spur higher inflation. Former Treasury Secretary Larry Summers, among others, has raised such concerns since the relief bill passed.
“I strongly doubt that it’s going to cause inflationary pressures,” Yellen said, referring to the administration’s infrastructure proposal. “The problem for a very long time has been inflation that’s too low, not inflation that’s too high.”
Yellen also said the United States will step up its efforts at home and overseas to fight climate change, “after sitting on the sidelines for four years.”
Treasury will work to “promote the flow of capital toward climate-aligned investments and away from carbon-intensive investments,” Yellen said. That approach has raised the ire of Republican Party members of Congress, who say it threatens the ability of the US oil and gas industry to access needed lending.
Yellen also noted that many developing nations are lagging in vaccinating their populations, and have also experienced harsh economic consequences from the pandemic. As many as 150 million people worldwide will fall into extreme poverty this year, Yellen said.
“The result will likely be a deeper and longer-lasting crisis, with mounting problems of indebtedness, more entrenched poverty, and growing inequality,” Yellen said.
The Biden administration supports the creation of $US650 billion in new lending capacity at the IMF to address such issues, she said. Many Republicans in Congress oppose the new allotment, arguing that much of the funding would flow to relatively better-off developing countries, such as China.
Yellen acknowledged that the additional credit would be distributed to each IMF member, but argued that “significant resources will go to the poorest countries most in need.” Nations can also donate some of their funds to the hardest-hit countries, which she expects many will do, she added.