- Joe Biden supports the OECD proposal to impose a global minimum tax on the profits of multinational companies, thanks to tax breaks.
- This position could be a game changer in a world dominated by the Liberal Dox, the biggest tax cut ever for forty years, especially businesses.
- The European Union is expected to levy an additional 50 billion euros in taxes each year 20 minutes Economist Stephanie Wheeler.
The next world has always been the last world race for companies, especially multinationals, to cut taxes? Joe Biden’s resumption of discussions on the global taxation of multinational corporations promoting OECD could include partial news in the next few weeks.
The issue is on the menu for a meeting of G7 finance ministers to be held in Cornwall from June 11 to 13 before reaching the G20 in October. This time, the plan may not remain a viable idea, but may eventually gain the consent of the world’s richest nations. 20 minutes Explains to you the possible (small) tax revolution.
What is the principle of this tax?
This is to stop the tax optimization of the giants of the world economy and to fight against the “erosion of the tax base and the shifting of profits”. Since the 1980s, the liberals’ favorable return to the neoliberal economic ideology of the day has been a tendency to more or less disconnect the state from the economy. This “low condition” thus translates into rationally lower taxes, especially for companies. In 1985 it was still 50% and today the world average corporate tax rate is 22%. As a result of globalization, facilitating the transfer of capital, some countries have resorted to bargaining: not to tax companies or to encourage them to come and live in their territory. Like Ireland, it has become an economic model.
In the OECD 2017, the G20 mandated the G20 to seek solutions to this “financial dumping” of a kind of tax competition between countries. Views: Not local SMEs, but multinational corporations with super profits that make it easy to travel to tax sites. As a result, countries such as France, which have higher taxes to guarantee, for example, “impose fines” on better social security, were interviewed by Judge economist Stephanie Wheeler. 20 minutes. “We know very well that Amazon, headquartered in Ireland, makes a lot of profit in France without paying taxes.
How can this minimum tax bypass tax haven?
The principle is very simple on paper: when a country where a company resides is taxed below 15%, other countries doing business can recover the difference. Take the example of Amazon, based in Ireland, which wants to keep the corporate tax rate at 12.5%. Other countries with Amazon can claim a difference of 2.5%, or 2.5%, without having to pay taxes, ”explains Stephanie Wheeler.
In our example, each country that does Amazon business will recoup a portion of this balance. If we are not interested in taxation, we may not see how countries can effectively recover these taxes. However, Stephanie Wheeler is not too worried: “This is a system that is a little difficult to set up, but it can be done. We know how to recover tax revenue, we have the technology, especially in France. In addition, in addition to this minimum tax, the OECD seeks to establish “surplus profits” beyond which states with the largest 100 multinationals can recover tax revenue.
Why is this tax really enforceable?
We are not talking here about the proposals of the Alter-Globalization movement that have long been rejected in the camp of sweet dreamers. This time US President Joe Biden is in the driver’s seat. “We can clearly see the burden of the United States internationally,” economists question 20 minutes : The US president wants to be on the agenda above priorities. This happened a few weeks ago: Joe Biden’s decision to support the removal of patents on vaccines against Covid-19 changed the position of multiple governments on the issue.
Joe Biden also comes at a very favorable time for such ideas, clearly opposing the Liberal Dox of the last forty years. States have spent a year and a half tackling the health crisis and supporting their respective economies, and the treasuries are empty. Joe Biden himself “collects stimulus and support projects, we’re 3 trillion: we have to fund them,” Stephanie Wheeler recalls. Today it is a solution to the tax evasion of multinational corporations.
How much can it earn?
According to Stephanie Villars, if companies are subject to at least 15% tax, the EU can be expected to recover 50 50 billion a year, including $ 4 billion from France. As such, we are far from revolutionary: by 2020, the French state budget had a deficit of 212 billion euros. Before the crisis, in 2019 it was already 72.8 billion. “A ridiculous rate of 15%”, announced this Friday morning Inside Release Gabriel Sukman, Professor of Economics, Berkeley. Many economists, including Stephanie Villars, are of the opinion that the corporate tax rate in France is 28%. Moreover, before changing his mind, Joe Biden had initially suggested a rate of 21%.
“Of course, it would be great if the rate was 25%, Stephanie Willers rejects. Although France can expect additional tax revenue of $ 26 billion a year, this is just the beginning. In fact, the simple idea that this principle of minimum taxation can actually be implemented changes the situation. Gradually, it is hoped that those who support this initiative will be able to raise rates. Joe Biden’s intention to raise the corporate tax rate in the United States from 21 percent to 28 percent just before Trump’s shows that the tide may have turned on the tax issue after years of rate cuts.
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