Why the United States is embracing global tax reform
Audio 04:07
US President Joe Biden, April 7, 2021 © REUTERS - KEVIN LAMARQUE
By: Dominique Baillard Follow
9 mins
The United States created a surprise on Wednesday April 7 at the G20.
They are now submitting a proposal for global corporate tax reform: Joe Biden's administration is now campaigning for a minimum tax on large multinationals.
Publicity
It is a major break with the harmful tax competition in which the States engage.
Janet Yellen the Treasury Secretary had prepared the ground this weekend, saying she is in favor of this reform within the framework of the OECD.
To the great satisfaction of Europeans.
For four years they have been pushing in vain a tax project on the giants of the net according to what they earn on the spot.
A project stopped dead by former US President Donald Trump.
The proposal, which is now on the G20 table, goes much further than their initial project.
First, Washington wants all the big multinationals to be concerned and not just Google, Apple and others, that is to say the American digital companies.
Second, according to the
Financial Times
, which was able to consult the document submitted to the 135 members of the OECD, the rate proposed by the United States would be around the 20% mark.
Almost twice as much as the proposal discussed so far within the OECD.
Radical change of foot from the United States
Raising taxes was the philosophy of the Democratic program.
During the campaign, Joe Biden pledged to reverse the massive tax cuts granted by his predecessor and he began to fulfill that promise.
The corporate tax that Donald Trump had cut from 35% to 21% is expected to rise to 28%, if an agreement is reached in Congress.
It is to support this national reform that the president is proposing a world revolution.
Joe Biden suggests that the club of rich countries adopt a floor rate high enough to discourage American companies possibly tempted by the retreat towards tax havens.
It is because it taxes companies at only 12% that Ireland, for example, has attracted Apple and other large American companies.
Could the reform carried by the United States be adopted in the coming months?
The OECD has given itself until June to finalize a comprehensive reform, otherwise each country will act as it pleases.
France already has a digital tax that annoys Americans a lot.
The American administration is showing realism: at a time when anti-Gafa taxes are popping up all over the world, and not only in Europe, the sanctions policy ends up becoming inoperative, consultation now appears to be more effective.
There will still be negotiations, because with this American proposal, all the multinationals are in the same boat.
The French luxury giants, for example, could suffer.
But for the moment, the large European countries, such as France or Germany, are particularly pleased with this progress.
If successful, this reform will also make it possible to finance the extraordinary expenses generated by the pandemic.
The global level of debt was already worrying before the start of Covid-19.
Once out of the pandemic, deleveraging will be a priority around the world.
In the United States, in Europe, as in emerging or developing countries.
The IMF, that is its role, insists moreover on the urgent need to increase taxes to finance the war effort which is being carried out at the moment to support the economies of the whole world.
If the American proposal is implemented by the OECD, an additional $ 100 billion would fall into public coffers each year.
It's a good start but still a drop in the face of the expenses incurred.
The IMF estimates that the G20 countries have spent 12.7 trillion dollars to support their economies.
In short
The United States is reactivating aid to the Palestinians.
The UN agency will receive $ 150 million from the US administration.
A welcome recovery for this agency which began the year with a liability of $ 75 million.
The United States was one of its main donors until Donald Trump came to power.
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