It has the support of the G-7 powers. It has the support of more than 130 nations.
Promoted by Treasury Secretary Janet Yellen, it would curb abuses by which corporations escape taxes overseas and help pay for America’s immense infrastructure needs.
Only one thing stands in the way. We’ll give you one guess.
Yep. The Republican Party.
Yellen’s proposal — a global minimum 15% tax rate for multinational corporations and foreign subsidiaries — has accrued a stunning level of support.
Even the Retail Industry Leaders Association, including giants like Target and Home Depot, supports it in the name of tax fairness.
No amount of support elsewhere could lead today’s Republican leaders to buy into anything the Biden administration supports.
No benefit would be beneficial enough, particularly if signed by a Democratic president.
We’re talking about ending what economists call the “race to the bottom,” other countries offering microscopic tax rates to induce corporations to establish shell accounts.
Nothing wrong with that race, say Republicans. That’s just “tax competition.” We must cut corporate taxes further to compete, they say.
This “competition” means that Apple, for one, has assigned a huge share of its profits to a subsidiary in Ireland simply because of low, low tax rates.
Nobel Laureate Paul Krugman calls the trend “leprechaun economics.”
What this all means is that the United States, which provides Apple’s home base and so much of what sustains it – highways, railways, health care, clean air and water, college-educated workers — gets minimal tax income from Apple to provide all that.
The trend greatly adds to our nation’s fiscal straits. In the ‘60s, observes Krugman, federal taxes on corporate profits accounted for 3.5% of gross domestic product. Now? About 1%.
Democrats hope to achieve this through budget reconciliation and a majority vote. With contrarians like Sens. Joe Manchin and Kyrsten Sinema being the tails wagging the dog, however, a solid bloc of minority Republicans stands as a virtual veto.
We continue to be a nation ruled by a minority, and to ignore our responsibilities to the planet and civilization.
Hence, Donald Trump, with fewer votes than Hillary Clinton, won a ticket thanks to the Electoral College to torpedo US support of the Paris Climate Agreement, though Americans by large margins support climate action.
But back to the issue of tax fairness:
A report by ProPublica details the extent to which the nation’s wealthiest individuals, Trump-style, paid no or next to no taxes.
It should alarm everyone that, as the Institute on Taxation and Economic Policy reports, 55 corporations that earned a combined $40.5 billion paid no income tax in 2018.
What do you say, Republicans?
In 2018, Elon Musk, on track to becoming the world’s wealthiest individual, paid no federal income taxes. This is made possible by the treatment of stock valuation as non-income. It may not be cash, but billionaires can of course convert it any time, and can borrow against their shares.
Now, Musk moves to Texas, where he’ll pay no state income taxes, either.
The Pandora Papers investigation by the International Consortium of Investigative Journalists has shone a light on the industry of sheltering the income of billionaires, cons and criminals.
This is a manifestation of what some economists call the “wealth defense industry — aimed at hiding monstrous gains from the tax system or otherwise masking the fruits of criminal enterprises.
On a similar plane is dark money – the means of making policymakers do what special interests want without any means of identifying them.
The Republicans want it that way. They want “tax competition,” and for their horses to win every time.
John Young is a longtime Texas newspaperman who now lives in Fort Collins, Colo. Email jyoungcolumn@gmail.com. See johnyoungcolumn.com.
From The Progressive Populist, December 1, 2021
Blog | Current Issue | Back Issues | Essays | Links
About the Progressive Populist | How to Subscribe | How to Contact Us