The Biden administration unveiled a plan that would raise corporate taxes to pay for its $2.3 trillion infrastructure proposal.

1. The corporate tax rate would increase to 28% from the current 21%.
2. Profitable companies earning US$2 billion or more would face a minimum tax of 15% on the income they report to investors, a rule aimed at tax evaders.
3. The tax rate on foreign earnings of companies would double, from 10.5% to 21%.

In particular, discussions about a global minimum corporate tax rate have gained new momentum after US Treasury Secretary Janet Yellen raised the issue in a speech earlier this week, citing the need to avoid a "race to the bottom."

The main motivation behind this initiative would be to prevent or discourage companies from transferring their profits or residence to tax havens, as well as to put an end to "tax competition" between regions.

The establishment of a minimum corporate tax to discourage companies from declaring taxes in countries with the lowest rates has been a key pillar of the OECD discussions, but an agreement would not be easy to achieve:

• A minimum corporate tax rate of around 21% would be well above the 12.5% figure that has been discussed at the OECD level.
•  Countries must also reach agreement on the other main pillar of tax negotiations, which aims to address where companies record their profits. In a digital world, many countries argue that it makes sense for companies to pay taxes where they generate revenue, rather than where they are headquartered.

But discussions about taxes are not limited to permanent changes. This week, the International Monetary Fund proposed a temporary "solidarity" tax for the winners of the pandemic and the wealthiest individuals. High-income individuals and companies that prospered during the coronavirus crisis should pay additional taxes to show solidarity with those most affected by the pandemic, according to the IMF.

Corporate tax revenue in OECD countries as a percentage of GDP

Over the past two decades, the typical OECD country has collected around 3 percent of GDP from corporate taxes. And while the United States has historically collected comparatively less revenue through corporate taxes relative to its trading partners, the gap was greatly exacerbated by the 2017 tax law. In fact, closing even half of the gap between the U.S. corporate tax burden and the OECD median burden is roughly sufficient to pay for the initiatives proposed in the American Jobs Plan.