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My plan for this section is to post links for articles that talk about things that are impacting our lives. I'll summarize the article and then give you my opinion on the issues they raise.
Articles of Interest
Biden's Minimum International Income Tax Rate Plan
On 3/30/22 the Wall Street Journal (WSJ) published an editorial entitled "Ditch the Global Minimum Tax Grab (link). The article reminds readers of one of President Biden's early "accomplishments". Biden wants to raise the corporate tax rate. Recall that Trump lowered this rate from 35% to 21%. One of the reasons for doing this was that the U.S. had the world's highest corporate income tax rate among industrialized nations. This was hurting the competitiveness of American corporations. At 21% the rate was brought down to where it was roughly in the middle of rates for industrialized nations.
For Biden and the Democrats this reduction in rates went against their narrative that corporation weren't paying their fair share. However, it was tough to argue that higher tax rates wouldn't decrease American competitiveness. To overcome this objection, Biden proposed that countries adopt a minimum corporate income tax rate. He could then say that the rate that American companies were taxed could now be raised because they were being protected from the "unfairly low rates" of competing nations.
The European countries bought into Biden's plan and negotiated a treaty whereby all signatories promised to have a minimum corporate rate of 15%. In its editorial the WSJ asserts that one net tax revenue change from this treaty is that European governments will be collecting more money from American multinational digital companies--Amazon, Airbnb and Meta. Also, in general, American companies will pay more in taxes to European countries that are required to raise their tax rates. This again means more money from American companies going to European governments and less tax revenue going to our Federal government because of the larger tax deductions resulting from the higher European tax payments. Taking everything into account, according to a financial model created by the nonpartisan Tax Foundation, the net result of this treaty is that the U.S. Federal government will lose $44B in tax revenue over a 10 year period.
If the Biden administration succeeds in increasing the U.S. corporate rate from 21% to 28% it will more than make up for the $44B tax revenue loss resulting from the treaty. But, the only purpose of the treaty is to provide cover to the Democrats for an increase in the corporate tax rate. The Biden administration is effectively paying $44B to other signatories simply to justify a corporate tax increase on U.S. corporations. Of course the cost of any such tax increase will be paid for by American citizens that are the shareholders, employees and customers of those corporations. The Biden will portray the successful negotiation of this tax agreement as an example of his international leadership skills. The European leaders will say he is a statesman compared to former President Trump, and gladly take the additional tax revenue from American corporations. Congress will need to pass supporting legislation in order for this agreement to go into effect. We need to watch how our two senators and one representative vote on any such legislation. Also, we need to replace Biden in the next election. This agreement that he negotiated is another lesser known example of what a terrible job he is doing as president.
Ditch the Global Minimum Tax Grab - WSJ
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