Treasury Secretary Janet Yellen called on Tuesday for business leaders to pay higher taxes to support government stimulus spending, and backed stronger labor unions and lowering barriers to foreign competition.
In a speech to the U.S. Chamber of Commerce, Yellen reiterated the White House’s intent to raise taxes on corporations and the highest earners as part of an ambitious infrastructure spending plan.
The administration also is seeking a global corporate minimum tax in an effort to stop companies from relocating their bases to avoid higher levies at home.
“With corporate taxes at a historical low of one percent of GDP, we believe the corporate sector can contribute to this effort by bearing its fair share: we propose simply to return the corporate tax toward historical norms,” Yellen said in prepared remarks for the Chamber’s Global Forum on Economic Recovery.
Yellen added that President Joe Biden’s American Families Plan will be paid for in part by a “series of tax reforms that ensure that wealthy individuals are paying their fair share.” She said the administration is also looking to stop tax evasion that has “stacked the deck for decades against responsible and compliant taxpayers.”
Chamber President CEO Suzanne Clark said the organization differs with the administration on the need for higher business taxes.
“The data and the evidence are clear: the proposed tax increases would greatly disadvantage U.S. businesses and harm American workers, and now is certainly not the time to erect new barriers to economic recovery,” Clark said in a statement. “The administration is right to champion infrastructure, and we want to be there with them to do that, but there are other ways to finance it.”
Along with the position on taxes and infrastructure, Yellen spoke about inequality and said it is in part fostered by a lack of bargaining power by labor, a potential sore spot for business owners at a time when only a little more than 10% of all workers belong to unions.
“Workers, particularly lower-wage earners, have seen wage growth stagnate over several decades, despite overall rising productivity and national income,” she said. “There are several contributors to this troubling trend, but one important factor is an erosion in labor’s bargaining power.”
She also talked up the benefits of global competition.
Former President Donald Trump had pushed policies such as tariffs, fought against Chinese theft of American technology and other intellectual property and pulled the U.S. from multiple global trade pacts. Yellen, though, said competition from abroad should be welcomed.
“Let others innovate and advance. Let us seek to advance faster and further. We ultimately benefit from the positive spillovers of innovation wherever it occurs,” she said. “As in any competition, if you lose one contest, you work harder to win the next. The better the competition, the stronger you will get. That has been the American way.”