Treasury’s Yellen Calls for Global Minimum Corporate Tax Rate

Mr. Biden’s plan would generate about $2 trillion over 15 years to pay for the infrastructure spending he outlined Wednesday. It would raise the corporate tax rate to 28% from 21%, increase minimum taxes on U.S. companies’ foreign income and make it harder for foreign-owned companies with U.S. operations to benefit from shifting profits to low-tax countries.

“We are working with G-20 nations to agree to a global minimum corporate tax rate that can stop the race to the bottom,” Ms. Yellen said.

The remarks were earlier reported by Axios.

Beyond the tax-rate increase, the Biden administration also wants to raise the minimum tax on U.S. companies’ foreign earnings to 21%, calculated on a country-by-country basis.

That could create a significant disadvantage for U.S.-based companies operating in foreign markets, because they would face taxes that their non-U.S. counterparts don’t. That is why the idea of a coordinated, global minimum tax is so crucial to the administration’s plans.

If the U.S. can get other countries to impose similar minimum taxes on companies based in their nations, the U.S. headquarters wouldn’t be at nearly the disadvantage that it would be if the U.S. moves alone.

The U.S. and more than 100 other countries have been engaging in talks through the Organization for Economic Cooperation and Development about creating such a tax and about rewriting the rules for where corporate income is taxed. Those complicated negotiations have been advancing, but they are fragile and an agreement has been slowed by the pandemic.

Ms. Yellen also pledged to restore the U.S.’s global economic leadership role as the world emerges from the dual health and economic crises of the Covid-19 pandemic, while criticizing the Trump administration over what she called its lack of engagement leading up to and during the pandemic.

“Over the last four years, we have seen firsthand what happens when America steps back from the global stage,” Ms. Yellen said. “America first must never mean America alone.”

She said the U.S. didn’t respond sufficiently to the domestic health crisis and failed to engage with international counterparts early enough to mitigate the global spread of the virus and ensuing economic downturn.

The speech comes as world leaders begin to gather online this week for the annual spring meetings of the International Monetary Fund and World Bank, where they are expected to focus on the prospects for emerging variants of the virus and the potential for new shutdowns that could undermine the global recovery.

Ms. Yellen said the U.S. needs to have a strong presence in global markets on a level playing field, and will work with willing partners “to protect and enforce a rules-based order.” She also signaled the Biden administration intends to work with China, but won’t shy away from confrontation when necessary.

“Our economic relationship with China, like our broader relationship with China, will be competitive where it should be, collaborative where it can be and adversarial where it must be,” she said.

She also emphasized that a strong global economy will benefit the U.S., bolstering domestic growth and making the U.S. safer. But she warned the world is susceptible to a deepening divide between rich and poor countries, as some countries are better able to control the virus and jump-start their economic recoveries.

Ms. Yellen said advanced economies must help ensure low-income countries have wide access to vaccinations, testing and therapeutics, and help lessen their economic pain.

To that end, the Treasury is supporting the IMF’s proposal for a $650 billion allocation of Special Drawing Rights, an international reserve asset that countries can exchange for dollars or other major currencies to cover obligations. Critics say that is an inefficient way to help poor nations because most of the SDRs would be given to rich countries that are the largest IMF shareholders. Republican lawmakers in the U.S. also say the issuance could aid repressive regimes and state-sponsored terrorism.

Ms. Yellen said the U.S. was working with the IMF and other countries to design a disclosure and reporting framework to track the allocations and monitor the ways in which countries use them.

“We do want to make sure that the SDR allocation goes to support relief and economic support in the lowest income countries,” she said.

—Richard Rubin contributed to this article.

Write to Kate Davidson at kate.davidson@wsj.com