It’s well known that many major corporations simply do not pay taxes on huge amounts of money. Revenue is diverted, or simply never paid. American corporations are serial offenders.
The G7 had been working on establishing a Global Minimum Tax for years. That’s no longer happening. As usual, the absolute worst possible option, backed as usual by “threats” from Trump, is the outcome.
The actual revenue effect is well illustrated by the Australian scenario. Australia will miss “significant” revenue simply because the G7 folded up like an origami class on day one.
This is more than weird. It’s at best corrupt and at worst a familiar level of gutlessness on the part of world governments. It’s a fiscal Munich.
America’s antiquated 19th-century revenue system and zombie economy is already tanking badly. US revenue is now seriously compromised, and it will get much worse soon enough. Spending is out of control with no additional revenue sources and trade in chaos.
Yet somehow, the G7 in its timidity was persuaded to cooperate with what is rapidly becoming the fiscal death of America, while robbing itself. This is in effect the American government supporting massive wilful tax evasion.
One of the reasons for the cave-in was the supposed “risk” of an American revenge tax on countries that charge those nice big tech guys taxes. Those countries would have had to pay an extra 15% tax, the same amount as the GMT. It’s also utterly pointless and infantile. That’s the one part of this farce that isn’t surprising.
It’s well known that conservative governments are basically otherwise unemployable shills for big business. It’s equally well known that each conservative IQ number comes with a decimal point in front of it. They have an unrivalled record of financial catastrophes. Brexit and US tariffs will go down in history as the dumbest economic policies in history, bar none.
This is abysmal governance, and the worst of all revenue scenarios for the world generally. And it’s being tolerated by the world’s leading economies. The G7 has become a herd of plush toys.
The G7 should have rejected even the suggestion of exemptions from the GMT, let alone any deal. As global trade steers its way around the black hole of the US economy, a “revenge tax” would have had minimal impact.
This inexcusable backdown also sets a truly lousy precedent for managing future tantrums. If a paltry “revenge tax” of 15% is all it takes to overturn good policy, what’s next?
There should be no exceptions at all to the Global Minimum Tax. This is yet another unnecessary ultra-expensive mess for the future to clean up.
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Disclaimer
The opinions expressed in this Op-Ed are those of the author. They do not purport to reflect the opinions or views of the Digital Journal or its members.
