US support and involvement in the tax agreement is important, given that roughly half the estimated 100 or so multinationals that would be caught within the new tax net are American and they would probably be the biggest of the taxpayers within that cohort.

Despite the loss of Manchin’s support and the likelihood that, after the midterm elections in the US later this year the Democrats will lose their slimmest of majorities in the Senate, Yellen remains convinced the US will eventually pass the legislation needed to participate in the new regime.

That’s because there is an enforcement mechanism of sorts within it.

The OECD plan has two “pillars.” One shifts some tax revenue from countries where companies are legally located to those where they operate and generate sales and profits. The other imposes the global minimum tax rate of 15 per cent.

A key element of the plan is the enforcement mechanism. If a country doesn’t have a tax rate of at least 15 per cent, its companies with operations in countries that do could find themselves handing over tax revenues – revenue that would otherwise, in the case of the US, have been paid to US Treasury – to those countries’ taxation authorities.

The US minimum tax rate of 10.5 per cent on foreign earnings leaves it exposed to those “penalty” taxes if it remains out of the agreement. It would also lose – and other countries would share -- an estimated $US200 billion ($290 billion) of extra tax revenue over a decade if it is a party to the agreement.

The US would be shooting itself in the foot if the rest of the developed world implements and enforces the minimum tax regime and it doesn’t.

Failure to participate would therefore penalise US companies and US government finances while benefitting those countries that are committed to the deal.

“They will levy this tax on American companies doing business in their jurisdictions and America will just lose out on tax revenues that we could use to invest in the strength of our economy,” Yellen said this week in an interview on the US non-profit National Public Radio.

“So, there will be incentives over time to adopt this in the United States.“

While there have been other hiccups besides Manchin’s change of heart and the protracted negotiations over complex technical issues – Hungary, ever the recalcitrant, has blocked the EU attempt to implement the plan – most of the key participants other than the US remain committed.

The EU is developing a “workaround” that would enable its members, other than Hungary, to act and more than 130 countries have committed themselves to the plan.

The US would be shooting itself in the foot if the rest of the developed world implements and enforces the minimum tax regime and it doesn’t. The damage to US companies and US tax revenues would be even worse if the OECD plan isn’t implemented and the EU and other major economies go their own and different ways with digital taxes.

Former Australian finance minister and now OECD Secretary-General, Mathias Cormann, who has described the tax deal as “historic and very important,” has acknowledged that some of the discussions about the detail of the agreement are “difficult” and that has led to the pushing out of the timeline for its introduction but remains confident an agreement will eventually be struck.

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As he said, once there is a critical mass of countries imposing the 15 per cent minimum rate on profits generated within their jurisdictions, it will be increasingly difficult for others not to follow as they saw other countries collecting the tax income they had left on the table.

It is unlikely that the Biden administration could alter the Republican opposition to the minimum tax plan but Manchin, who has said he is open to reconsidering his stance on climate and tax issues in September, after he’s seen more data on US inflation, isn’t a completely lost cause even though he has, not quite single-handedly – there are other “moderate” Democrats – effectively sabotaged most of the more ambitious elements of the Biden administration’s agenda.

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