I like to think of myself as a very liberal, open-minded person.
A type that could verge on “hippie”, if not for my hair usually being brushed and physical inability to deal with the texture of a dreadlock. However, as I stare into the tumultuous center of my mid-to-late-20s, I find myself holding more staunch convictions – no matter how “outrageous”.
For instance, a few weeks ago I wrote an article in favor of the himbo man – I still wholeheartedly stand by it. I have a visceral aversion to the concept of “sapiosexuality” (this is where supposedly normal people claim that lively, intellectual debate can serve the same purpose as foreplay. Sorry to kink-shame, but sapiosexuality is nothing more than a way to inadvertently tell people that you, yourself, are very smart and clever, while also — in the case of the many men that claim to suffer from this affliction — dating conventionally attractive women in their late teens to early 20s?). And finally, I am toying with the idea (after seeing the phrase on a graphic tee on Instagram) that from now on, “I only sleep with socialists”.
This brings me to a very exciting (though seemingly painfully dull) tidbit of news that dropped last week. Treasury Secretary Janet Yellen announced that a group of 130 nations have agreed to a 15% global minimum corporate tax!!!
(I know at least one of you reading this has heard the term “Treasury Secretary” one too many times and doesn’t really understand what it means – you are not alone).
Definition: The secretary of the Treasury acts as a principal advisor to the President and the Cabinet on economic issues. The US Department of the Treasury, which the secretary oversees (see what they did there?), performs many high-brow, money-related functions, including paying the nation’s bills, printing money, and collecting taxes.
The (international) Organisation for Economic Co-operation and Development states that a 15% minimum tax rate would generate $150 billion in additional tax revenue each year. After taking effect in 2023, it will be the biggest change to the international tax system in a century.
The Deal:
Last Thursday, 130 nations agreed to a blueprint in which multinational corporations would pay an appropriate share of tax, no matter where they operate. Every Bond movie alludes to this sort of thing – some sketchy offshore company/man trying to quietly evade taxes in the British Virgin Islands. (I actually don’t know if a word of that is true – I never watched any Bond films in full but it felt right nonetheless).
In any case, the tax deal approaches a goal that had proved elusive for the global community for decades as countries tried to prevent businesses from shopping for the country with the lowest rates — what Treasury Secretary Janet L. Yellen called a 30-year “race to the bottom” on corporate tax.
The result of these negotiations is further remarkable because it includes China, Russia and India among the signatories — all large economies that had (apparently, this is news to me) been wary of a tax overhaul.
I’m still confused:
The conceptual framework of the deal includes:
–> 15% minimum global tax rate proposed by the US
–> Rules that would force technology giants like Amazon, Google and other big global businesses to pay taxes in countries where their goods or services are sold, even if they have no physical presence there.
Basically, this whole thing is the international community’s answer to the complicated questions of how to tax the Facebook’s of the world who have substantial sales in countries they are not in.
*For people super interested, one of the most famous tax avoidance schemes is named “double Irish with a Dutch sandwich” (yes, like a confusing sign you’d see outside of a strip club). The funky name didn’t help it because international pressures caused the tax loophole to be closed very recently (2015, full effect 2020), but it gives some context to how tax avoidance through country-shopping works.
The dissenters:
“It is not over until the fat lady sings”, responds countries like Ireland and some breezy Caribbean nations. This is obviously not a real quote – I have no a/c in my house, and it is uncomfortably apparent in my writing.
Smaller nations that have long benefited from being tax havens are holding out for better terms. (I always have to respect the art of the haggle)
*By having the liberty to issue a lower corporate tax, these countries have made tax revenue at a scale they couldn’t otherwise have accessed, given they don’t have many other advantages (workforce, extraordinary infrastructure, proximity to resources etc.) to offer to multinational corporations.
France, effectively playing the role of big sister and leader of the charge for a tax on digital giants, has promised to work to bring the reluctant countries in line. The French Finance Minister whose name you don’t care about says mildly,
“I will ask them to make all the necessary efforts to join this historic agreement”.
The Trade War is boring, so I’ll keep this short:
Perhaps you, like me, have attempted to bleach the apocalyptic remnants of the Trump https://e4njohordzs.exactdn.com/wp-content/uploads/2021/10/tnw8sVO3j-2.pngistration from your mind. But if you dig through the residue, you’ll probably recall talk of him stoking the fire on a brewing global trade war. A lot of this conflict stems from the taxation of big tech companies that earn revenue online across the globe. The Trump and Biden https://e4njohordzs.exactdn.com/wp-content/uploads/2021/10/tnw8sVO3j-2.pngistrations have threatened retaliatory tariffs as India, Britain, France and others have introduced taxes on digital services from American companies.
This deal could essentially calm the waters of this international trade tension. Which would do us all some good because no one, and I mean no one, is riveted by this topic. Moving on.
Passing the mic to President Biden:
Old Joe said in a recent statement that, “Today marks an important step in moving the global economy forward to be more equitable for workers and middle-class families in the United States and around the world.” (We love to hear it).
He continued, “With a global minimum tax in place, multinational corporations will no longer be able to pit countries against one another in a bid to push tax rates down and protect their [corporate] profits at the expense of public revenue.”
Not passing the mic to Trump, never passing the mic to Trump, but he is involved (I’m sorry).
This deal is a victory for President Biden since the minimum tax agreement is a crucial step to make multinational companies pay significantly more in US taxes, which will ultimately help fund his ambitious spending plans. His https://e4njohordzs.exactdn.com/wp-content/uploads/2021/10/tnw8sVO3j-2.pngistration reinvigorated negotiations this year with a new proposal for a global minimum tax. Meaning, there was something to invigorate. Meaning, it builds on the groundwork laid by Treasury Department negotiators under Trump.
Am I saying something positive about Trump? No.
Officials had hoped to solidify the framework last year, but their efforts were delayed. Partly by the pandemic, and partly by an unsurprising twist in the Trump https://e4njohordzs.exactdn.com/wp-content/uploads/2021/10/tnw8sVO3j-2.pngistration’s stance as it effectively sought to allow some American companies to choose their tax treatment worldwide. (The man wears corruption like Fran Lebowitz wears a men’s suit – exceptionally well).
Mr. Biden’s team dropped that insistence.
Our girl Janet:
Ms. Treasury Secretary Yellen cast the framework as a victory for tax fairness. She claimed that decades of competition among countries to reduce tax rates to woo corporations “not only failed to attract new businesses, they have also deprived countries of funding for important investments like infrastructure, education and efforts to combat the pandemic.”
Then for a deeply American, patriotic rallying cry:
“America will enter a competition that we can win; one judged on the skill of our workers and the strength of our infrastructure.” (Not really a surprise that America backed a deal that they’d have the advantage in, but we’ll take it)
I only sleep with socialists:
Some conservative economists had praised previous global efforts to actually reduce corporate taxes, touting on about the trickle down (literally proven to not work) and all that. They predicted that it would bolster economic growth and worker incomes.
Unfortunately, they left out the funny little fact that there are many people on this planet that are actually monsters disguised as humans. And these monsters insist on pocketing billions for themselves with truly no mind to worker incomes or economic growth or anything that vaguely resembles the word compassion.
In the meantime, let us hope that this little agreement goes through.
Administration officials state that if enough other countries enact similar measures targeting tax havens, they will collectively demolish the benefits to companies of shifting their profits – which would then pressure the holdout countries to raise tax rates and sign onto the accord. It should also be noted that in theory, as long as the biggest players in consumption rates abide by the agreement, smaller tax havens won’t have too much of an impact overall even if they hold out.
(P.S. This is clearly not a socialist policy by any means. I am admittedly a Bernie girl and if the world were in my hands – I would tax big, angry corporations to the nth degree. I’m ordering the graphic tee as we speak. I’ll let you know how it fits).