136 countries have come to an agreement to set a minimum global corporate tax rate of 15%. This deal was brokered by the international Organization for Economic Cooperation and Development (OECD). This is all done in the name of implementing a “fairer system.” But the reality is simply that the purpose of this agreement is to eliminate tax competition. Governments hate competition. If countries are allowed to offer more attractive tax rates compared to others, well where do you think businesses are going to flock? Loss of business in a country results in loss of tax revenue. This makes it challenging for governments to satisfy their tax appetite.
The rhetoric coming out of the mouths of global leaders is, as expected, full of feel-good clichés and platitudes. UK Chancellor, Rishi Sunak, said the deal would
“upgrade the global tax system for the modern age. We now have a clear path to a fairer tax system, where large global players pay their fair share wherever they do business.”
OECD Secretary, General Mathias Cormann, says the deal is
“a far-reaching agreement which ensures our international tax system is fit for purpose in a digitalized and globalized world economy.”
US Treasury Secretary, Janet Yellen …
“Rather than competing on our ability to offer low corporate rates, America will now compete on the skills of our workers and our capacity to innovate, which is a race we can win.”
German Finance Minister, Olaf Scholz, tells Reuters,
“We have taken another important step towards more tax justice.”
Speaking at the OECD, U.S. Secretary of State, Antony Blinken, said this deal is a
“once-in-a-generation opportunity.”
Yeah, I bet it is. It’s an opportunity for the big boys to bully developing countries who are trying to attract businesses and growth. Here’s a little reminder that people like Blinken are not noble stewards of the world looking out for the common man:
The OECD gets to the heart of the matter. It estimated the agreement will reallocate $125 billion of profits from multinational corporations to governments worldwide. It’s never enough for the vampires. They keep sucking away. Notice the soft term, “reallocate,” is used by the press as a euphemism for the more appropriate term, “take.” As if profits (whether earned by an individual or corporation) are subject to reassignment by the hand of some political God.
The justification for this agreement is that in this new digital world, big tech companies like Amazon, Facebook, etc. are shielding their profits from taxing authorities. These companies are locating their headquarters in tax-friendly nations while otherwise doing business all over the world. They are exploiting the tax competition among nations, they say. How dare they! But, do you ever hear the flip side of this statement: that governments are exploiting the profits of businesses around the world?
Argentina’s economy minister, Martin Guzman, thinks the agreement doesn’t go far enough. He wants 21%! Vampires, they are.
But in the end, the large corporations will support the deal. It crushes their competition as well. Facebook’s VP of Global Affairs welcomed the deal saying,
“We recognize this could mean paying more tax, and in different places … The tax system needs to command public confidence, while giving certainty and stability to businesses. We are pleased to see an emerging international consensus.”
And here’s a spokesperson for Amazon expressing their support for the
“progress towards a consensus-based solution for international tax harmonization, and we look forward to [the OECD’s] continued technical work.”
Of course they support it. This will help solidify big business’ grip on the market and hamper the efforts of competing start-ups that don’t have the political clout or capital to coddle-up to world governments.
Ireland, Hungary, and Estonia all have corporate tax rates below 15%, so naturally, they resisted the plan … at first. Note that the relatively low tax rate of Ireland attracted Apple, Google, and Facebook to set up base camps there. It’s unclear how the arms of all three countries were collectively twisted, but magically they all have accepted the deal. An offer they couldn’t refuse, perhaps?
Thanks to Wikileaks, we know these major global financial institutions — such as the Organization for Economic Cooperation and Development — are nothing but tools used to exert power and bend the will of those that resist compliance. Kenya, Nigeria, Pakistan, and Sri Lanka have not agreed to the plan … yet.