“Where you gonna go, where you gonna run, where you gonna hide? Nowhere … ” This line is part of a terrible 1993 remake of the classic horror film Invasion of the Body Snatchers, but it could also be the new policy directive of the U.S. Treasury Department. It turns out that Secretary Janet Yellen, keeping in line with her boss’ Make Globalism Great Again efforts, wants to institute a global minimum tax on corporations to ensure they are imprisoned and punished on an international level. But is there an appetite for this policy initiative among countries that have prospered from low corporate levies?
Yellen About Corporate Tax Rates
Speaking at the Chicago Council on Global Affairs, Yellen proposed a minimum global tax rate, forcing these entities to pay a baseline amount of levy no matter where they are located. Yellen believes this would halt the “30-year race to the bottom” that has enabled multinational corporations to avoid being punished by the federal government.
Companies shop around the global marketplace to find a country that offers the smallest tax bill, so Yellen says her proposal would force companies to contribute to a nation’s needs and countries would facilitate an environment of “all citizens fairly share the burden of financing government.”
“It’s important to work with other countries to end the pressures of tax competition,” Yellen said. “We’re working with G-20 nations to agree to a global minimum corporate tax rate that can stop the race to the bottom.”
According to the former head of the Federal Reserve, it would also prevent U.S. businesses from facing a vast disadvantage in the global economy.
“Competitiveness is about more than how U.S.-headquartered companies fare against other companies in global merger-and-acquisition bids,” Yellen added. “It’s about making sure that governments have stable tax systems that raise sufficient revenue to invest in essential public goods and respond to crises.”
Yellen plans to bring this up at the next International Monetary Fund (IMF) and the World Bank powwows. But this is not an entirely new concept. The 37-nation Organization for Economic Cooperation and Development (OECD) has been debating an international framework for a global corporate income tax (CIT) for two years.
President Joe Biden has said he would hike the corporate tax rate from 21% to 28% and confiscate firms’ foreign income at a minimum level of 21%. The president’s multitrillion-dollar two-part infrastructure plan is projected to generate enough revenue in 15 years to cover eight years of spending, which means his aggressive stimulus and relief package would have seven years of deficits.
Is There Enough Appetite?
Would Yellen’s idea generate enough support on the international stage? Many nations, particularly the most advanced jurisdictions, have benefited from maintaining a low corporate tax rate, mainly Ireland and Luxembourg.
Ireland has seen incredible economic gains by possessing a 12.5% corporate tax rate. Many American global corporations have operations in Ireland, including Apple, Microsoft, PayPal, Facebook, and Google.
Luxembourg is often described as a tax haven, despite having a top rate of 24.94% for companies doing business in the European country. However, reports suggest that Luxembourg officials allow large corporations to pay as little as 1%. This has seen many American businesses, such as Heinz, AIG, Fidelity, Staples, and FedEx, establish subsidiaries in Luxembourg, which explains its $4 trillion in foreign direct investment (FDI).
Other countries also have low tax rates: Hungary (9%), Montenegro (9%), Andorra (10%), Bulgaria (10%), and Moldova (10%).
Globalism versus Globalization
Should countries worldwide get on board the global CIT train, it would establish a precedent for other globalist confiscatory efforts. What would stop nations from adopting a cross-border minimum tax on individuals? Indeed, such a concept would start with billionaires and funnel its way to millionaires – and then everybody else. And this is the problem with globalism, not economic globalization.
Globalism is the idea of planetary enslavement, relying on globalist institutions and continental unions to erode the sovereignty of independent nations and individuals. Whether it is the love affair over central bank digital currencies (CBDCs) or multilateral trade agreements, globalism is a decades-old proposition with far-reaching and odious implications for people and businesses that value liberty. Economic globalization, meanwhile, is the simple idea that an entrepreneur can saunter across a border, purchase pencils for a nickel, and return home to sell those same pencils for six cents.
Liberty Nation‘s Tim Donner opined in December 2020 that President Biden has his MAGA: Make America Global Again. While this is true, Biden has another mandate: Make Globalism Great Again.
Read more from Andrew Moran.