The US treasury secretary is proposing an international “minimum corporate tax,” such that the United States and other nations potentially could raise taxes on corporations in their home countries without fear that those companies would then bolt overseas to another country with a more-favorable tax rate.

Such an agreement would work on a mechanism similar to that used for the Paris Accords for climate change — by which, it would not be a formal treaty, but rather an international agreement.

Treasury Secretary Janet Yellen’s proposal comes at a time when President Biden and his administration are preparing to work with the US Congress to raise taxes on American corporations and wealthy individuals.

Such an increase would be the first major federal tax hike in a generation — the last under President Bill Clinton in the early 1990s.

“President Biden’s proposals announced last week call for bold domestic action including to raise the U.S. minimum tax rate and renewed international engagement, recognizing that it’s important to work with other countries to end the pressures of tax competition and corporate tax base erosion,” said Yellen, also a former chair of the US Federal Reserve. “We’re working with G20 nations to agree to a global minimum corporate tax rate that can stop the race to the bottom.

“Together we can use a global minimum tax to make sure the global economy thrives based on a more level playing field in the taxation of multinational corporations and spurs innovation, growth and prosperity,” she added.

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