Biden, G-7 leaders embrace global minimum corporate tax rate of 15%
President Biden and the leaders of the G-7 group of nations will support the global minimum corporate Tax at least 15% on Friday, a policy that could eventually drive business investment away from the US
This is according to the Taxpayer Protection Alliance (TPA), a non-profit advocacy group based in Washington, D.C., which argues that a higher global minimum rate will ultimately “pass on workers and consumers through lower compensation and higher prices.” Will go.”
What is a global minimum tax rate, and how will it work?
“We won the race to the top with the highest corporate tax rate in the industrialized world prior to the 2017 tax reforms,” said Patrick Heijer, TPA Policy Vice President. “It contributed to decades of anemic development.”
Before the passage of the 2017 Tax Cuts and Jobs Act, the US corporate tax rate was 35%; It is now at 21%.
“When the US dropped its rate to a competitive 21%, investments, jobs and wages flourished before the start of the pandemic,” Hager said. “Biden’s global minimum corporate tax is not about eliminating competition among nations, but about eliminating competition between the desires and reality of progressives.”
There is some evidence to suggest that corporate taxes are ultimately borne by workers and consumers. A recent analysis by the Tax Foundation suggested that up to 70% of the tax burden falls on labour. As the tax reduces investment, productivity and wages, the dollar amount of the cost of labor can exceed the revenue generated by the tax by a “broad margin”, the Tax Foundation. said.
But the Biden administration is arguing that the minimum rate would create a more equitable tax system that would “help provide a foreign policy for the middle class and help support working families everywhere.” According to the White House fact sheet, the money raised from the higher tax will be spent on infrastructure initiatives as well as child care, affordable housing and education.
The strategy aims to crack down on companies that employ a variety of tactics to reduce their tax liability, often by shifting profits and revenues to low-tax countries such as Bermuda, the Cayman Islands or Ireland, regardless of the amount of sales. You have gone
Billions of dollars are spent every year as practiced by US and foreign multinationals Treasury Department.
The Yellen and Biden administrations recently embarked on a long-stalled effort to reform the international tax system, throwing the full weight of the US government behind a broader effort to crack down on tax avoidance by multinational corporations.
By getting all countries to agree on a single minimum corporate tax rate, the White House is seeking to eliminate some tax havens without hurting the competitiveness of American firms.
According to a recent one, the worldwide average corporate income tax rate is 23.85%, measured in 177 countries. Analysis Operated by Tax Foundation, a non-partisan organization.
The average rate in G-7 countries is slightly higher – 24% – a significant drop from 1980, when corporate tax rates around the world averaged around 40.11%.