The Global Minimum Tax Shakedown

Biden is holding Congress hostage: Impose the levy, or see foreign nations seize American profit anyway

By Phil Gramm and Mike Solon. Excerpts:

"As expected, after the 2017 tax cuts went into effect, real wages grew 43% more in 2018 and 93% more in 2019 than the 2011-17 average increase. 

Pension and mutual funds, charitable organizations and insurance companies holding equities to fund death and annuity benefits—which own some 72% of all American equities—saw their rate of return increase 22% relative to the average 2011-17 returns in the two years following the tax cuts before the pandemic."

"The OECD minimum-tax agreement is estimated to collect some $236 billion in new taxes and redistribute some $200 billion of tax collections by allocating taxing authority based on where sales occur, not where profits are reported. Despite the OECD’s decade of work on the tax, the organization along with the Treasury Department claims not to know how much of this tax will be paid by U.S. companies—or, more precisely, by American investors, workers and consumers.

But the answer seems obvious since only two of the 25 top tech companies and two of the top 25 Fortune 2000 companies are based in Europe, while 18 and 13 are based in the U.S., respectively. Denying amortization of intellectual property, allocating taxing authority based on where sales are made, and imposing what amounts to an excess profits tax on very large, highly profitable companies guarantees that American companies will pay most of the tax in virtually every nation in the world where the tax is collected. The Oxford Center for Business Taxation has estimated the U.S. will pay 64% of the profits tax, compared with 9.5% for China, 3.8% for the U.K., 1.6% for Germany and 0.7% for France."