Top International Monetary Fund (IMF) officials on Wednesday lent support to key aspects of President Biden’s corporate tax proposals, including raising the rate and implementing a global minimum.
“The IMF has been calling for a minimum global corporate income tax rate as a way to interrupt the race to the bottom in corporate income taxation,” IMF Fiscal Affairs Director Vitor Gaspar said at a virtual press briefing, adding that his analysis was in principle only, and that the IMF has not analyzed the specifics of Biden’s plan.
“And that is something which is important to ensure that governments have the resources needed to the various spending priorities that they have to serve.”
Biden on Wednesday unveiled more details of his $2.5 trillion tax plan, which includes raising the corporate tax rate to 28 percent and securing agreements with other countries to put in place a minimum corporate tax in an attempt to limit corporate tax avoidance.
Gaspar said the global uptick in government debt was an effective and appropriate response to the COVID-19 pandemic, but emphasized that frameworks for stabilizing the debt would be needed in the medium term.
He pointed to the U.S., in particular, as a positive case of strong fiscal support boosting the economy, which it estimates will grow at 6.4 percent this year and reach its pre-COVID-19 level next year.
Paolo Mauro, the IMF deputy fiscal director, went a step further, endorsing the idea of a COVID-19 surcharge from rich countries to help cover the costs of responding to the pandemic.
Gaspar also weighed in on the question of whether certain investments Biden has proposed qualify under the IMF’s definition of infrastructure, an issue that has set off hot debate in Washington.
“The emphasis on investing in people and infrastructure is in line with the priorities that the IMF has been emphasizing for many years.”
Republicans have criticized Biden’s $2.3 trillion plan, saying it goes beyond the bounds of traditional infrastructure, such as roads and bridges, with investments in child care, home care, research and development and job training initiatives.