Editorial of the “World”. For several decades, international competition has been built around a self-proclaimed iron law of organizing fierce competition to propose ever lower corporate tax rates. The profits of multinationals, by definition mobile and elusive, have set out in search of ever more lenient fiscal skies, thus depriving the great nations of precious budgetary revenues for the benefit of confetti States, which concentrate 40% of the profits of these large groups.
However, this movement is not inevitable. The political voluntarism that Janet Yellen, the new US Treasury Secretary, has just expressed to put an end to this race constitutes a salutary paradigm shift, capable of upsetting the current logic of globalization.
At a conference in Chicago on April 5, Mr.me Yellen said the United States was ready to agree with other G20 countries on a minimum rate of corporate levies. “Together, we can use a global minimum tax to ensure that the global economy thrives on a more level playing field in the taxation of multinational corporations,” she suggested.
Tax collectors of last resort
The idea is to make any company pay a minimum of 21% tax on its profits, regardless of where it makes them. This minimum rate, calculated country by country, would allow G20 members to recover substantial sums by establishing themselves as tax collectors of last resort capable of claiming from their respective multinationals the possible difference with the rate charged by tax havens. De facto, the advantages offered by the latter would become obsolete.
All the major economies have an interest in putting an end to the fool’s game that this competition for the lowest tax bidder constitutes. The damage caused by the pandemic is forcing States to mobilize their budgetary revenues as much as possible. Therefore, the optimization of tax levies on companies becomes a lever that can no longer be neglected.
The European Union (EU) could have been at the initiative of this revolution, but it has always come up against the Maastricht Treaty, which requires the unanimity of the Member States for the establishment of a common fiscal policy. The fact that the proposal comes from the United States is an opportunity that should not be missed. To date, the EU and the United States concentrate half of the multinationals and represent 50% of world consumption. The joint adoption of this minimum tax system within the framework of the G20 would create a powerful dynamic capable of reversing the logics that had prevailed until now.
The American proposal, which decisively relaunches the work entrusted by the G20 to the OECD, will face intense lobbying from multinationals and consulting firms which live on tax optimization. But states have no choice. Public opinion urges them to regain control of their taxation by putting an end to this dumping, of which they are the main losers. Rather than competing in the field of the lowest tax bidder, they have every interest in entering into a healthier competition which would consist in attracting capital according to the quality of infrastructure, education, research and environmental efforts. The key is a more sustainable globalization for the benefit of the greatest number.
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