WHEN: Today, Monday, November 1st
WHERE: CNBC’s “Worldwide Exchange,” “Squawk Box,” “Squawk on the Street” and “TechCheck”
Following is the unofficial transcript of a CNBC interview with United States Treasury Secretary Janet Yellen and Ireland Minister of Finance Paschal Donohoe on CNBC today, Monday, November 1st. Following is a link to video on CNBC.com:
All references must be sourced to CNBC.
Part I on CNBC’s “Worldwide Exchange”
BRIAN SULLIVAN: Well, leaders at this weekend’s G20 Summit formally signing off on that new global tax framework, setting a 15% minimum tax on companies including a number of Big Tech’s biggest players. Well, the Biden administration may have gotten world leaders on board and now may face a more difficult task of actually winning over Congress here in America. Ylan Mui spoke with Treasury Secretary Janet Yellen, on how she plans to accomplish that and she joins us now with more from that big interview. Ylan.
YLAN MUI: Well Brian, sealing this deal has been a top priority for Treasury Secretary Janet Yellen. As you mentioned, she’s won over the world leaders including the Finance Minister of Ireland, the poster child for low rates and today she’s visiting Dublin to show how committed both countries are to this agreement. She told me she’s confident she can get Congress on board with the bargain.
SEC. JANET YELLEN: The President feels and I certainly agree with him that American corporation should pay their fair share. The minimum tax rate of 15% is certainly not, not so high that it affects their ability to compete and be, be competitive globally. You know, it levels the playing field in a way where competition among countries and their firms can take place on the basis of economic fundamentals.
MUI: Now, there is new hope that here in the US the house could vote potentially tomorrow or at least this week on President Biden’s social spending package, which includes the overhaul of the tax code that Yellen has been fighting for. But a key piece of this agreement is much farther off. It requires 100 of the most profitable multinationals, namely Big Tech, to redistribute how they pay taxes around the world. Now that’s supposed to go into effect in 2023 but it’s not even clear that Treasury has the power to strike this deal without congressional approval.
YELLEN: When it’s ready, I continue to do that to work to make sure that members of Congress understand why this is something that’s in the national interest and is necessary to adapt international taxation to a very changed world.
MUI: I also spoke with the Finance Minister of Ireland, Paschal Donohoe. He told me that the world is counting on America to follow through.
PASCHAL DONOHOE: Because of the confidence that they’ve given me in change that I believe will ultimately happen across the world. That in turn is one of the reasons why Ireland wants to be part of this agreement.
MUI: Now Brian, this deal is a major win for Yellen and for the Biden administration abroad. We’ll see whether they can also score a win back home as well. Back over to you.
Part II on CNBC’s “Squawk Box”
MUI: Good morning, Andrew. This trip is really symbolically important because Ireland was one of the last holdouts to this deal and of course, it’s low tax rate of 12.5% made it famous and it helps lower roughly 1,000 of the world’s biggest companies including Apple, Pfizer, IBM all to Ireland. Finance Minister Paschal Donohoe said that the turning point for him to sign on was clearly setting that minimum rate at 15%, not at least 15%, and he told me that certainty is critical even if companies see their tax bills rise.
DONOHOE: They will know how much more they will be paid and they can be confident that this agreement on these issues will not spill over into bilateral tax disputes or even trade difficulties or tension in the future.
MUI: But Ireland could still wind up losing 2 billion euros a year because of the way that revenue from mostly digital companies would be reallocated across the world. Now Treasury Secretary Janet Yellen told me that the tax code has to keep up with the changing economy.
YELLEN: I think this is rebalancing to make sure that we can support investments in our economies and the corporations pay their fair share.
MUI: Now countries that don’t follow through and raise their rates could wind up sacrificing tax revenue to other jurisdictions. So Becky, there are consequences if somebody breaks their promise. Back over to you.
BECKY QUICK: Binding, binding consequences?
MUI: Well so at least as far as the global minimum tax is concerned that yes, that is part of the deal. As you implement it, there needs to be what they’re calling an income inclusion rule that would say if you don’t tax up to 15%, let’s say you keep it at 12.5%, some other country can come in and make up that and take that difference in revenue. So you would lose out someone else would get it if you don’t follow the rules. That’s for that part of the agreement, but the broader, the other part of the agreement around digital taxes, that part is still being negotiated.
Part III on CNBC’s “Squawk Box”
MUI: It’s making progress on the world stage and the question is, is it going to make progress here at home. Now Treasury Secretary Janet Yellen did express confidence to me this morning that the House would pass President Biden’s economic agenda this week including that overhaul of the international tax code.
YELLEN: I think there is appreciation in the United States of the importance of this international agreement and we’ve been staying in very close touch throughout the negotiations with members on both sides of the aisle explaining what we were doing and working with them to understand their concerns.
MUI: But there are still questions about a separate piece of this agreement that would require the most profitable global companies to redistribute their revenues around the world and it’s not even clear that Treasury has the authority to strike this deal without congressional approval.
YELLEN: It could require legislation and it isn’t decided yet what the appropriate method will be. We will of course, take whatever steps are appropriate and required to make sure that it becomes law in the United States.
MUI: Now also on the Federal Reserve, Yellen said that she discussed with Biden who to name as Fed Chair. She told me she advised him to pick someone who’s credible, focused on Fed independence and committed to the dual mandate. And Becky she told me that Fed Chair Jay Powell has done a good job. Back over to you.
QUICK: Ylan, that’s incredibly important. Did she say that she recommended Jay Powell to the President that that would be her vote or not?
MUI: She would not say whether she has recommended him directly. It has been reported previously that she does support him and there was some question over the weekend from the remarks she made to reporters aboard the plane heading over to Ireland where she is now of whether there might be some other candidates that she might support instead but to me, she said that she believed that Powell had done a good job and was supportive of his plan to reach full employment.
Part IV on CNBC’s “Squawk on the Street”
MUI: Now separately, I also asked Yellen about the advice she gave to the President on who to nominate as Fed Chair.
YELLEN: I’ve talked to him about candidates and advised him to pick somebody who is experienced and credible. I think that Chair Powell has certainly done a good job.
MUI: And guys, she emphasized that a commitment to Fed independence and the dual mandate are two of the critical criteria. Back over to you.
Part V on CNBC’s “TechCheck”
MUI: Well good morning Carl. The world’s most profitable companies are going to have to face some tradeoffs under this agreement, including America’s tech giants. Yellen told me she expects this though to be a net win for US businesses.
YELLEN: Especially the large technology companies that have been affected by an array of unilaterally imposed digital services taxes in recent years. They will see a more stable tax environment that will be conducive to their doing business. I expect them to be supportive of the agreement and hope that other American businesses will as well.
