Although tax competition is one of the most destabilizing elements for the economy, Janet Yellen, secretary of the United States Treasury, made an innovative proposal on Monday, on the eve of an international meeting. You would like to create a minimum rate for corporate income tax, known as corporation tax, worldwide. In other words, a country would not have the right to set its tax below this minimum percentage.
In fact, there are tax havens, generally small countries that have little spending: they offer very low rates to attract the companies that reside there. This is the case in the Bahamas, for example, Jersey. Or, within Europe itself, with Ireland and Luxembourg. Two countries that have welcomed Amazon, Apple and other glasses, for low taxes on your earnings to the detriment of neighboring states.
Objective: finance the economic recovery plan
Europe has failed to implement such a device, with the exception of VAT, where it imposes parentheses for rates. Indeed, This proposal goes against the sovereignty of the States that, at least with us, it hardly has economic levers, due to the monetary union that has mutualised everything. And then there is more than the tax.
Remember Ireland, which collapsed after the euro crisis, which was interested in its 12% tax rate, the lowest in the union, despite strong pressure from its neighbors and creditors. In addition, it would be technically complicated because beyond the harmonization of rates, there are many other parameters : what exactly do we tax, deductions and reductions, etc. Therefore, countries could agree on tariffs without solving the problem.
France, which has the highest rate of the large countries and one of the highest in Europe (28% + 3.5% social contribution) would be in favor, precisely so as not to suffer more from the competition of others. And the United States is about to be in the same situation: if they make this proposal it is because they are preparing to increase their corporate tax from 22% to 28%. Goal : finance the gigantic economic stimulus program of Joe biden.
Why is this proposal interesting?
This proposal is interesting for two reasons. One, she points a reversal of the global trend. Forty years ago, the liberal revolution began with lower taxes, started by the United Kingdom and the United States. Today, both raise taxes on businesses, but also on wealthy people. The whole world will probably continue with a new ideological cycle beginning.
Two, this proposal from the US administration points out a change of tone from the Trump era and its unilateralism. A nice change for the famous Gafa tax, discussed within the OECD. These Glasses, leaders of new technologies and big winners of the contactless economy imposed by the pandemic, will undoubtedly enter fiscal rank.