Because there is talk of a global minimum tax on multinationals

US President Biden wants to raise the corporate tax to finance his recovery plan. But we are thinking of an international project to support the post-Covid-19 recovery

(Photo by Joe Raedle / Getty Images) A ​​global minimum tax on multinationals, while increasing the burden of the domestic tax on corporate earnings and on wealth. This is the recipe proposed by the President of the United States, Joe Biden, to smooth out the social inequalities, exacerbated by the global economic crisis triggered by the pandemic and promote recovery. All "blessed" by the orientation of the International Monetary Fund and the commitment of the finance ministers of the G20, chaired by Italy, who intend to reach an agreement on international taxation by July.

The plan of the United States

The first known element is the increase in the corporate tax, similar to the corporate income tax, which in 2017 the Republicans had scissored from 35% to 21%. President Biden intends to raise it to 28%, mainly to finance the ambitious $ 2 trillion Infrastructure and Jobs plan. Wall Street has shown that it is not afraid of this measure, with the S&P 500 index for days above the record level of 4 thousand points, being considered a stimulus for employment and the recovery of the economy.

The other point concerns families with incomes exceeding $ 400,000 a year who will suffer a proportional increase in taxes in the next economic program. Biden predicted this, confirming what was announced in the electoral campaign. Among the various possible actions there will be an increase in the tax on capital gains for those with incomes of over one million dollars a year and an extension of property taxes.

The global plan

Beyond American borders, Treasury Secretary Janet Yellen, former head of the Fed under Obama, announced that “we are working with the G20 nations to achieve an agreement on a minimum global tax on multinationals, which can stop the race to the bottom ”. The proposal would raise the minimum tax on American companies to 21% and would be calculated on a country-by-country basis, with a deterrent effect on those that protect their profits by exploiting advantageous taxation in countries that offer more favorable conditions than others. "Competitiveness is not just about how American companies compare with others, including mergers and acquisitions," he explained: "But it is about the need for governments to have stable tax systems capable of raising sufficient revenues to invest in public goods and services. essential to respond to crises and that all citizens share the tax burden equally ”.

Eight of the ten largest-cap global companies in the world are American, according to a Pricewaterhouse Cooper report. The agreement, already discussed in 2019 within the OECD, would concern, for example, the giants of the web, but was slowed down by the previous administration of Donald Trump, which claimed the right to "safe harbor" for American companies, which could have chosen a simplified rules regime. On Wednesday 7 April, on the other hand, the finance ministers of the top 20 economic powers in the world declared themselves "in agreement in cooperating for a fair, sustainable and up-to-date international tax system", working for "an agreement on agreed solutions on the international taxation agenda by mid-July 2021 ".

To cement this orientation came the statements of the director of fiscal affairs of the International Monetary Fund, Vitor Gaspar: "An option available to policy makers would be the possibility of establishing a contribution for the recovery that would take the form of a surcharge on personal income tax or corporate earnings, as some corporations have done very well in terms of equity valuation ", during the crisis.

The latest IMF fiscal monitor mentions the solidarity of post-unification Germany, as a historical precedent. And on the world minimum tax, Gaspar supports Yellen's idea: "It is extremely important for financing developing countries" and for ensuring that governments have the resources to spend on their priorities in economic recovery. According to the IMF 95 million people fell into extreme poverty in 2020.


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