US Treasury Secretary Janet Yellen said that President Joe Biden’s $4 trillion spending plan would be good for the US, even if it contributes to rising inflation and results in higher interest rates, Bloomberg News reported.
“If we ended up with a slightly higher interest rate environment it would actually be a plus for society’s point of view and the Fed’s point of view,” Yellen said in an interview with the outlet on Sunday.
“We’ve been fighting inflation that’s too low and interest rates that are too low now for a decade,” the report quoted Yellen as saying.
“We want them to go back to” a normal interest rate environment, “and if this helps a little bit to alleviate things then that’s not a bad thing- that’s a good thing,” Yellen added.
Last week, US President Joe Biden’s administration put forward a $6 trillion budget plan that opponents said will fuel higher inflation – something that Yellen on Saturday said was unlikely to be permanent.
She hailed an agreement to pursue a global minimum tax of at least 15% on corporations as a return to multilateralism that would help to stabilize tax systems, while preserving national authority to set tax rates and policies.
“I really consider this a historic achievement, and it shows that multilateral collaboration can be successful,” Yellen told reporters.
The United States was still pursuing a 21% minimum for the overseas earnings of US companies even though the G7 agreed on at least 15%, she said.
Treasury officials have said they believe a higher US tax rate will create incentives for other countries to push higher, otherwise they would miss out on potential revenue from American companies in their territory.
Not all countries would need to sign on to the global corporate tax deal for it to work, Yellen said, as it would allow countries to additionally tax overseas income of companies operating via tax havens, negating that advantage.
“It doesn’t require absolute agreement across the board. It has a way of bringing hold-outs into it,” she said, adding that she hoped to secure the backing of G20 countries that represent a “very large share” of global GDP at a meeting in July.
