Biden administration proposes global minimum corporate tax which will adversely hurt the poor

U.S. Treasury Secretary Janet Yellen

Under Joe Biden, the U.S. Treasury’s Janet Yellen has proposed a global minimum corporate tax of 15 percent among 140 countries. A company’s customers pay corporate taxes through high prices and often hurt the poorest among us through higher prices of goods and services. Yellen has said, “It is imperative to work multilaterally to end the pressures of corporate tax competition and corporate tax base erosion,” the Treasury Department said in a statement Thursday. “Treasury underscored that 15 percent is a floor and that discussions should continue to be ambitious and push that rate higher.” Such a move would create a surge of corporate tax avoidance which is legal, as opposed to tax evasion which is illegal. It is also a way to make it appear they are going after greedy wealthy corporations when in fact, the Biden administration proposal is a backdoor way to hurt the poorest people financially.

The global Organization for Economic Cooperation and Development (OECD) is an organization of 140 countries and is expected to agree on the minimum 15 percent at some point this summer. Other countries part of the OECD, such as Ireland, have a lower corporate tax rate of 12.5 percent and would need to be convinced to raise it. Here in the United States, the corporate tax rate is 21 percent and President Biden has said he would like to see our country’s corporate tax rate raised to 28 percent which would be incorporated in higher prices of goods and services.

If such a move is made by the 140 countries in the OECD, then it will cause multi-national corporations to move some operations to countries with no or low corporate taxes. Companies will simply shift some aspects of their company to places like the Vanuatu, Cayman Islands, Anguilla, etc. as they have a zero corporate tax rate. There is a balance a company makes to save on taxes when choosing which country to incorporate for which division. For example, if a country has a low to no corporate tax structure but poor laws protecting intellectual property, then a company may decide not to incorporate their trademark and patent side of the business in that country.

Such moves do not make a company evil and are not evading the payment of taxes, they are legally doing what is best to keep their prices to the consumer as low as possible while remaining as competitive as possible. People, like corporations, try to pay the least amount in taxes they may legally pay which is why everyone takes legal deductions off their income. Americans do not pay their respective federal income taxes based on their gross income but their adjusted gross income (after deductions).

Categories: Business, Government, News, Politics

Tags: , , , , , , , , , , ,

%d bloggers like this: