Can Biden's push to tax big corporations go global?

Can Biden's push to tax big corporations go global?
For many, discussion of taxation policy can often have the same effect as a sleeping pill. But now that the Biden administration has ramped up efforts to impose a global minimum corporate tax, the conversation has suddenly gotten way more interesting as other economic heavyweights vie to come out on top.

What is Biden pushing for? The White House wants to raise America's domestic corporate tax rate after deductions to 28 percent, up from the 21 percent threshold (just below the Organisation for Economic Co-operation and Development average) implemented when the Trump administration slashed taxes for the wealthy and corporations back in 2017.

US Treasury Secretary Janet Yellen has also called for a global corporate tax rate, a minimum that all corporations would have to meet no matter which country they are filing in. In theory, developed economies would still set their own local corporate tax rates, but if companies pay lower rates abroad, their home states could essentially "top-up" their taxes so that they still pay the full rate. Importantly, Biden's proposal would also eliminate loopholes in the US tax code that have long incentivized corporations to move profits to tax havens like Bermuda and the Cayman Islands.

Why now? There are two main (and interconnected) reasons that Yellen is going hard on this now. First, Biden recently unveiled the most ambitious infrastructure plan in decades, worth a total $2 trillion. To cover the costs of this massive project, his administration has to get the money from somewhere.

Moreover, in order to avoid potential setbacks US firms might face globally as a result of the new domestic corporate tax hike, Biden wants other countries to follow suit, ensuring that US-based tech and pharma giants remain competitive (and dominant).

Domestic pushback. Reaction in the US has been predictable. Business groups and Republicans warn that upping the tax rate will cut jobs and economic growth. Even some moderate Democrats say that a domestic tax rate of 28 percent is too high. And with the Democrats holding only a razor-thin majority in the Senate, Biden can't afford to lose a single Democratic vote.

But progressive Democrats argue that abolishing tax loopholes that have allowed multinational companies to flourish while inequality deepens is precisely the right move. Proponents of the plan point to a recent report that found that at least 55 percent of America's biggest companies paid no federal corporate income taxes during the last fiscal year.

The view(s) from abroad. For years, big European nations frustrated with American behemoths like Starbucks, Amazon, and Google that flood their markets yet pay nothing back to their governments, have been pushing for a similar global corporate tax rate. France, backed by the UK and Germany, has been leading the way, though the Biden proposal well outpaces the 12.5 percent standardized tax rate the OECD had proposed.

While Washington dragged its feet in the past, it is now desperate to get on board. But there's a catch: Germany and France say that the plan must include rules on taxing US tech giants that quash competition in their countries, something that the European Union as a bloc has long defended.

Still, some countries vehemently reject the plan outright. Ireland, with one of the lowest corporate tax rates in the OECD, has greatly benefited from operating as a tax haven for multinationals to stash their profits, acting as what one academic described as a "tax-avoiding funnel between nation-states." Similarly, the Netherlands has attracted the likes of Nike, Google, IKEA, and others by allowing these corporations to negotiate rates with Dutch tax authorities. As such, The Hague is likely quite comfortable with the current arrangement (no matter the pushback from Brussels).

Looking ahead. Major economies across the Atlantic have never coordinated their tax systems in such a significant way before. Yellen says these tax code reforms would end a global "race to the bottom" that has undercut American businesses and their workers for decades. It's clear, however, that those opposed, both in the US and abroad, are going to put up one hell of a fight.

Meet Zoe Marshall, grandmother, fishmonger, and thriving business owner.;dc_trk_aid=504469522;dc_trk_cid=156468981;ord=[timestamp];dc_lat=;dc_rdid=;tag_for_child_directed_treatment=;tfua=;gdpr=${GDPR};gdpr_consent=${GDPR_CONSENT_755};ltd=

When Zoe Marshall decided to switch careers in her forties and become a fishmonger, she was scared. After leaving her job of 23 years, Zoe was forced to pivot in order to keep her family's home. Despite challenges, she forged ahead, opening Sea-Licious. Accepting Visa payments in her fishmonger shop, this access to commerce helps Zoe provide convenience to her customers and confidence in their transactions. Though she's one of the only women in the fish market each morning, her business and its place in the local community are flourishing with Visa's help.

Learn more about Zoe and her story.

Listen: Can Big Government still rein in Big Tech or has it already lost control? Never before have just a few companies exerted such an outsized influence on humanity. Today's digital space, where we live so much of our daily lives, has increasingly become an area that national governments are unable to control. It may be time to start thinking of these corporations as nation-states in their own rights. Ian Bremmer speaks with Nicholas Thompson, CEO of the Atlantic and former WIRED editor-in-chief, about how to police the digital world.

Subscribe to the GZERO World Podcast on Apple Podcasts, Spotify, Stitcher, or your preferred podcast platform to receive new episodes as soon as they're published.

In the lead-up to this year's COP26 climate summit in Glasgow, much of the attention has been focused on last summer's wildfires across the US and Europe, and more recently skyrocketing European energy prices. But what about Asia, the world's biggest and most populated region, which also has the highest share of global carbon dioxide emissions that cause global warming? Asia has unique climate risks but also many opportunities for solutions, and whatever happens at COP26, Asian countries led by China and India are primed to lead the world in the struggle to make the planet greener before it's too late. In a live discussion moderated by Shari Friedman, Eurasia Group's Managing Director of Climate and Sustainability, global experts discussed these and other topics during the first of a two-part Sustainability Leaders Summit sponsored by Suntory.

More Show less

We're just days away from COP26, the landmark global climate conference that's been dubbed the last chance to get the climate crisis in check. In the lead-up to the event in Glasgow, dozens of countries have released new ambitions to reduce their future carbon footprints. For years, climate activists and experts have called on governments to introduce carbon pricing schemes – either through taxes or emissions-trading schemes. So who's heeded the warning? We take a look at the top ten carbon emitters' share of global emissions and details about their respective national carbon pricing schemes.

Marietje Schaake, International Policy Director at Stanford's Cyber Policy Center, Eurasia Group senior advisor and former MEP, discusses trends in big tech, privacy protection and cyberspace:

Do cryptocurrencies make it harder to enforce foreign policy sanctions?

Well, that is exactly what the Biden administration worries about. As part of growing concerns of whether unregulated currencies undermine a whole host of policies, sanctions and foreign or trade policy should be a priority area. And just like others who wish to evade tracing of their wealth or transactions, the very states or their sanctioned entities should be assumed to resort to all options to evade restrictions while continuing to do business. So having cryptocurrencies undermining the ability to enforce strategic goals logically raises eyebrows in Washington.

More Show less

Back in August, when the Taliban took over, we asked whether anyone in the international community would recognize them. Now it looks like things are heading that way.

This week, the Kremlin hosted a summit with the Taliban that was attended by China, India and Pakistan, as well as all five Central Asian Republics.

The domestically-focused US, however, wasn't there. The US continues to maintain that the Taliban can't be trusted. But does it matter? In 2021 does a Taliban-led government even need American recognition to function and thrive?

More Show less

For Kevin Rudd, former Australian PM and now CEO of the Asia Society, the science on climate change is pretty much done, so the only unresolved issues are tech and — more importantly — lack of political leadership. He can't think of a single national political leader who can fill the role, and says the only way to get political action on climate is to mobilize public opinion.

Rudd joined for the first of a two-part Sustainability Leaders Summit livestream conversation sponsored by Suntory. Watch here and register here to watch part two Friday 10/22 at 8 am ET.

Taking place on October 21 and 22, the Sustainability Leaders Summit will go beyond preexisting narratives and debate priorities for governments and industries ahead of COP26. Placing the spotlight on Asia's role in the global sustainability agenda, the event will address whether Asian countries and companies can achieve shared sustainability goals, and what is needed to help get them there. The summit will be co-hosted by Tak Niinami, CEO of Suntory Holdings, and Ian Bremmer, founder and president of Eurasia Group and GZERO Media. We will address three key questions: How can Asian countries, with the help of the private sector, achieve shared Sustainability Goals? Why does this matter? And what are the policy changes needed to bring it about?

Attendance is free and open to the public. Register to attend.

More Show less

Subscribe to GZERO Media's newsletter, Signal


Subscribe to GZERO Media's newsletter: Signal


Subscribe to GZERO Media's newsletter: Signal