CORPORATE TAXATION is one of the thorniest issues in international economic policy. Janet Yellen, President Joe Biden's treasury secretary, and a former head of the Federal Reserve, is duly weighing in. On April 5th she grabbed the attention of the occupants of corner offices worldwide with a speech to the Chicago Council on Global Affairs. The headline was a call for countries to agree on a global minimum tax rate for large companies.Such a levy, Ms Yellen said, would help "make sure the global economy thrives based on a more level playing field", and would help end a "30-year race to the bottom". Though the idea of a minimum tax raises hackles in tax havens in the Caribbean, parts of Europe and farther afield, many other big economies will welcome America's renewed commitment to multilateralism on tax after the prickly unilateralism of the Trump years.Over the past decade, growing corporate-tax avoidance has met with a growing backlash. Breakneck globalisation allowed multinationals to replace fears of double taxation with the joys of double non-taxation, using havens to game the system. By exploiting mismatches between countries' tax laws, taxable profits could be cut or even made to disappear. The game became easier with the rise of intangible assets, which can be shifted between jurisdictions more easily than buildings or machinery. Big tech has been a big beneficiary: the five largest Silicon Valley giants paid $220bn in cash taxes over the past decade, just 16% of their cumulative pre-tax profits.
Tricky to pick the right thread, Finding the best system of economy or Today's Good News, but here we are. Janet Yellen calls for a global minimum tax on companies. Could it happen?
Finance ministers from the G7 group of leading economies are confident of striking a deal on taxing multinational companies at their meeting in London.The agreement is expected to include a global minimum rate of corporation tax. It would target tech giants such as Amazon and Microsoft.German finance minister Olaf Scholz said the deal would "change the world". He said a 15% rate would help pay back debts that have built up during the pandemic - and that he was "absolutely confident" there would be an agreement. "If we agree on the minimum taxation for corporates, this will help to go out of this race to the bottom we see with taxes today," he told the BBC.
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