Donald Trump’s global economic strategy was to rail against other nations for ripping us off while doing little to level the playing field. Indeed, the trade wars he started harmed American consumers and cost taxpayers billions in subsidies paid to U.S. farmers.
Joe Biden looks upon American leadership differently. His and Treasury Secretary Janet Yellen’s so-far successful campaign to implement a global minimum 15% corporate tax is an early sign that there’s a far better way than Trumpian fits of pique.
We’ve been living with the problem for years: American corporations, which paid roughly one-third of federal revenues in the middle of last century, now pay just one-tenth of federal revenues. They dodge about $90 billion in taxes annually and hold $2 trillion in profits offshore. Meantime, corporations and wealthy individuals are estimated to cheat governments of $427 billion in taxes a year.
When, about a month ago, Biden and Yellen debuted their push to build a firm tax floor below which corporations could not fall, naysayers asked what good it was to leave out China and India. The question has now been answered: The two giants were among 130 countries, representing 90% of global GDP, that last week okayed the concept as a means to tackle chronic tax avoidance by multinational firms.
An agreement in principle is not a final deal; definitions are notoriously slippery. And even if every last nation purported to sign an ironclad agreement to prevent tax avoidance, it’s a certainty that many governments will be unwilling or unable to resist the lure of providing breaks, incentives and direct investments that undermine the new regime.
But every step forward is one in which the wealthiest and most powerful economic interests on Earth come a bit closer to paying their share to governments, which can then do their part to invest in helping the disadvantaged, and in which U.S. policymakers can levy reasonable taxes on our richest conglomerates without worrying that they are engaging in an endless game of whack-a-mole. Keep it up.
