The Joe Biden administration tapped its back for achieving a milestone tagged as “economic diplomacy” by Treasury Secretary Janet Yelen, as it got the nod of 130 nations making up 90 percent of the international GDP on the global minimum tax rate on corporations.

The agreement stipulates the imposition of a minimum tax of at least 15 percent on corporations in a bid to prevent “race to the bottom”, as termed by Yellen, that happens between countries attempting to attract companies through low tax rates. Included in the signatories are the members of the G-20, as well as China, Russia, and India.

“No nation has won this race,” the Treasury Secretary said through a statement on Thursday.“Lower tax rates have not only failed to attract new businesses, they have also deprived countries of funding for important investments like infrastructure, education, and efforts to combat the pandemic. In the United States, this agreement will ensure that corporations shoulder a fair share of that burden.”

US taking the lead

Since 2013, the Organization for Economic Cooperation and Development (OECD) has been pushing to settle with a decision to justify taxation on corporations globally. This moves toward the goal to acquire hundreds of billions of dollars in terms of tax revenue, which, as experts said, were considered government losses.

“It’s absolutely fair to say the Biden administration pushed it over the line,” Daniel Bunn, Washington-based Tax Foundation’s vice president of global projects, said, as reported by Voice of America

“This time last year, things were essentially at a stalemate,” he noted. The former US administration was not completely engaged with the global minimum tax plan but “The Biden administration picked it up and really threw a lot of political capital into it to convince other countries that they needed to sign on to it,” he said.