Nine countries are rejecting the Biden administration’s push for a “global minimum tax” for corporations.
According to Fox News Business, “130 of the 139 countries in the Organization for Economic Cooperation and Development agreed to a long-sought conceptual framework to overhaul the global tax system, including a minimum rate of at least 15% on multinational corporations, regardless of where they operate. But nine countries – Barbados, Estonia, Hungary, Ireland, Kenya, Nigeria, Sri Lanka, St. Vincent, Peru and the Grenadines – did not sign the tentative framework.”
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The rejections by Hungary, Ireland, and Estonia are particularly threatening to the deal, as the European Union requires unanimous consent for its adoption.
According to Chris Edwards, the Director of Tax Policy Studies at the Cato Institute, “Smaller countries tend to have lower corporate tax rates because they know that they need to be welcoming to investment to compete with giants such as the United States.”
Paschal Donohoe, Ireland’s finance minister, gave a similar explanation during a speech in April, “I believe that small countries and Ireland is one of them, need to be able to use tax policy as a legitimate lever to compensate for advantages of scale, location, resources, industrial heritage and the real, material and persistent advantage enjoyed by larger countries.”
The policy was endorsed by President Biden and other world leaders during the G7 meeting last month. The White House said the policy is “a critical step towards ending the decades-long race to the bottom that pushes nations to compete over who can offer the lowest tax rate to large corporations at the expense of protecting workers, investing in infrastructure, and growing the middle class.”
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The White House did not explain how depriving corporations of the funds they use to pay their employees benefited workers. Further, the middle class has been shrinking as a result of the upper-class growing. The Cato Institute reported, according to U.S. Census Bureau data, “in 2018, over 30 percent of U.S. households earned over $100,000 (i.e., the upper class). Fewer than 30 percent of households earned between $50,000 and $100,000 (i.e., the middle class). The share of U.S. households making at least $100,000 has more than tripled since 1967, when just 9 percent of all U.S. households earned that much (all figures are adjusted for inflation).”
“In 2018, the share of households earning less than $50,000 (i.e., the lower class) dropped below 40 percent for the first time since the U.S. Census data on this metric started to be collected in 1967. Back then, 54 percent of households earned less than $50,000,” they continued.
