The IMF and World Bank spring meetings are about to kick off, where those who pay no income tax get to talk about tax evasion, tax hikes, inequality, and Building Back Better. US Treasury Secretary Yellen will use the platform to push for a global standardization – upwards – of corporate tax rates. National Security Advisor Sullivan has also tweeted in support:
“The US is committed to end the race to the bottom on corporate tax rates and prevent corporations from shifting jobs overseas. A core piece of our national security strategy is national competitiveness: creating jobs & raising wages at home, not incentivizing tax havens.”
That as Democratic Senator Manchin says he doesn’t support the tax increase from 21% to 28% proposed by his own party, with 25% being the limit; and Republicans attack POTUS and FLOTUS for having used a corporate vehicle to reduce their tax on $13m of 2017-19 income from book royalties and speaking fees.
Taxes are unpopular with those who pay them, and those who can will try to avoid them, but whether taxes are needed depends on one’s politics, not economics (and actually sees neoliberalism and MMT agree: they are optional). Moreover, imposing a global corporate tax rate makes *logical* sense if one wants to limit the power of capital vs. labor – and such agreements are seen in other areas of regulation. Except:
This would make a key tax rate a global, not a national issue; who would decide the rate?; what if it didn’t fit the economic cycle in some states?; tax hikes would hit smaller global economies hard; yet there would have to be more state spending to prevent a recession. Yet even standardised tax wouldn’t solve the problem of capital and jobs flight: what of interest rate differentials – or do we need one interest rate/curve?; what of regulations – or do they need to be standardized? And what of exchange rates – or should we adopt one currency to make it all easier? In which case we will all need one central bank too – and won’t that solve *all* problems, as we see in Europe?- READ MORE
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