The Democratic Party has rarely had a problem with raising taxes on Americans to fund their policies. President Joe Biden and his administration are now taking things a step further by pushing for tax increases on other countries in addition to the United States.
Treasury Secretary Janet Yellen is lobbying for a “global minimum tax” for corporations.
In a speech Monday to the Chicago Council on Global Affairs, Yellen lamented what she called “a 30-year race to the bottom on corporate tax rates.”
“Competitiveness is about more than how U.S.-headquartered companies fare against other companies in global merger and acquisition bids,” she said. “It’s about making sure that governments have stable tax systems that raise sufficient revenue to invest in essential public goods and respond to crises, and that all citizens fairly share the burden of financing government.
“President Biden’s proposals announced last week call for bold domestic action, including to raise the U.S. minimum tax rate, and renewed international engagement, recognizing that it’s important to work with other countries to end the pressures of tax competition and corporate tax base erosion.
“We are working with G20 nations to agree to a global minimum corporate tax rate that can stop the race to the bottom.
“Together, we can use a global minimum tax to make sure the global economy thrives based on a more level playing field in the taxation of multinational corporations and spurs innovation, growth and prosperity.”
First of all, the idea that a requirement for other countries to raise taxes on multinational corporations would “spur innovation, growth and prosperity” is completely insane.
As a general rule, raising taxes stunts growth for a business. Yellen provides no evidence as to how these global tax increases would lead to more innovation and growth.
In addition, it is the Biden administration’s own ill-advised policies that have forced it to push the idea of a global minimum tax.
Last week, Biden released his whopping $2 trillion infrastructure plan, most of which does not even have to do with infrastructure.
In order to fund the plan, Biden would increase America’s corporate tax rate from 21 percent to 28 percent. He would also raise the current 10.5 percent minimum tax on foreign profits to 21 percent, according to Politico.
Regarding the proposed global minimum tax, Politico said it is meant to “prevent companies from relocating wherever they find lower taxes.”
In other words, Biden is afraid that if he taxes the daylights out of U.S. corporations, they might decide to move to a country with lower tax rates, which they would be well within their rights to do.
He does not like the idea, so he wants to push other countries to raise their taxes.
The Democrats know that it wouldn’t look great for them if American corporations were lured away to other countries because of Biden’s tax increases.
Instead of incentivizing these corporations to remain on domestic soil, Biden wants other countries to change their policies so that the corporations won’t want to go there.
If that approach succeeds, Biden could boast that he passed his massive tax increases to fund his plans without losing many corporations.
While this might sound positive to the uninformed, those who understand the idea of a global minimum tax can easily see how this could hurt the global economy rather than help it.
Yellen has attempted to paint her efforts as a collaboration with other countries that would benefit both parties.
“Since taking her post in January, Yellen has stressed the importance of multicountry alliances,” Politico reported.
“Her pitch for finding agreement on taxes and other fiscal policies stands in contrast to former President Donald Trump’s administration, which generally pivoted away from multilateralism in economics and multiple other matters.”
These two sentences subtly try to suggest that Trump was somehow wrong for his fiscal policies. In reality, his tax cuts and overall fiscal policy contributed to a thriving American economy.
A global minimum tax is hardly a compromise benefitting both America and other nations. Instead, it is an attempt by Democrats to force corporations to stay in the United States and disincentivize them from seeking lower tax rates elsewhere.
In just a few short months, Biden has shown that he views American corporations simply as a means to fund his progressive policies.
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