Not so long ago my small company paid just US$20,000 less in annual corporation tax than a large American corporation did in Europe that year. I would like to say it was a reflection of my company’s global domination but, sadly, no. The difference in turnover was several billion dollars and not in the right direction! So frustrated was I by the workings of capitalism and the global tax system, particularly for the ‘little person’, I was tempted, but of course resisted, an embrace of socialism…
Move on to today and we have a 78-year-old President Biden looking to achieve things most commentators said couldn’t be done. Incidentally why are the Republicans allowed to attack him for senility in such a blatant way? Are there not laws against ageism in the US?
Biden is seeking both to achieve a minimum corporation tax globally, designed to prevent multinational corporations from shifting profits to low-tax jurisdictions, and to pursue a proposal which would allow countries to charge corporation tax on the largest multinationals based on sales in that country. Biden has asserted US leadership on this issue and may well succeed. Germany and France are broadly in favour, low corporation tax countries like the Netherlands and particularly Ireland are making conciliatory noises. It will also head off the need for the EU to go solo with all the trade tensions that might cause. The UK has already conceded that ever lower corporation tax rates are not the solution to boost economies and close deficits, with sharp rises on the way.
Raising corporation tax to more uniform and fair levels has the added benefit of narrowing wealth disparity and allowing infrastructure investment. Leading business figures who have benefitted from many tax perks over the years talk about threats to capitalism and Environmental, Social and Governance concerns. It is time to put their money where their mouth is.
On the back of this, Biden is planning huge infrastructure investment through his US$2.3 trillion American Jobs Plan on top of his US$1.9 trillion American Rescue Plan. Whilst there are legitimate worries about fiscal strains and inflation, the time feels right. Anyone travelling in America would notice that a long-term threat to its future is its crumbling infrastructure and it is time to level the playing field somewhat by business picking up part of the bill through fairer, broader based taxes.
And Biden, having grasped the Covid threat, has also found time, presumably with highly competent aides, for pulling troops out of Afghanistan, imposing sanctions on Russia, reviving the Iran deal and tackling climate change, all without barely a tweet. In comparison, the Trump years seem more damaging every day.
There are many hurdles ahead but three cheers for grown up politics and the wisdom of age!
Inside Right Politics 