Tuesday, March 16, 2021

No Escape: Yellen Wants Global Minimum Tax

Treasury Secretary Janet Yellen is working with her counterparts worldwide to forge an agreement on a global minimum tax on multinational corporations, reports The Washington Post.

Notes the Post:

The effort, which would involve a fraught and challenging global negotiation of tax laws, could prove one of Yellen’s biggest policy legacies if it succeeds. It also could prove central to Biden’s presidency...

A key source of new revenue probably will be corporate taxes, which President Donald Trump sharply cut in 2017. Although he has not proposed entirely reversing Trump’s cut in the corporate tax rate from 35 percent to 21 percent, Biden has said he would aim to raise potentially hundreds of billions more in revenue from big businesses.

In effect, a minimum corporate global tax would eliminate the ability of multinational corporations to shift income to countries that have the least onerous taxes. There would be no escape.

“A global minimum tax could stop the destructive global race to the bottom on corporate taxation and help discourage harmful profit-shifting,” Yellen told U.S. senators during her confirmation process.

Economist Joseph Stiglitz, another pro-tax advocate concurs with Yellen, “It’s a little like the Paris climate accord of taxes. Every country thinks it can steal business from others by lowering taxes, and the only beneficiary of that race to the bottom has been the richest multinational corporations.” 

According to the Post, Yellen is working to curb the practice through an effort at the Organization for Economic Cooperation and Development in which more than 140 countries are participating. The goal is for countries to agree in principle to a minimum corporate tax rate that would make it harder for multinational corporations to play countries off one another by threatening to leave.

But the Post adds, "it remains highly unclear whether Yellen and the OECD can successfully negotiate a new agreement, particularly given the complexity involved of coordinating new tax rules across so many different countries."

Let's hope the coordination is impossible to pull off. 

Corporate taxation is about taking money from the private sector and funneling it into the crony public sector.

Yellen's minimum global tax proposal is about closing loopholes that allow firms to keep more of their income. We should never forget what  the great economist Ludwig von Mises pointed out,  "Capitalism breathes through those loopholes."



  1. What better reason for innovation to create and maintain the breath of capitalism by Seasteading or other creative methods?

  2. This administration sure is hell bent for capital destruction. As for corporate tax,in the end, it's the consumers,not the corporations who'll pay.

  3. I love how tax competition is describe as a "race to the bottom." If such a race actually exists, then the political class has already won.

  4. The idea is of course to prevent new companies and tax those companies that do not play political games. Those that play the political game will always see their tax payments lowered and the ones that play it well will in the end receive taxes. That is what the profit from government contracts, regulation, subsidy, and other favorable government actions will exceed the taxes paid.

  5. Politics of envy designed to pit the wealthy against the poor will result in lower standard of living for everyone except the politicians.

  6. A GREAT IDEA whose time is long overdue. I think the situation could be further improved by the OECD signatories agreeing to reserve a certain fixed number (say 25-50) of places for the worst individual corporate heads and/or corrupt politicians/government officials to be publicly executed ANNUALLY. This would go a long way to assuage the anger of the populace and would likely serve as a USEFUL OBJECT LESSON to others who managed to escape the same fate that year! Hi

  7. I'm sure Xi is very supportive of such idiocy. Moar business flight to China!