I couldn’t resist the metaphorical implications of Salvatore Garau’s invisible statue yesterday, but over the weekend a much more practical story had broken and I’d intended to write about it before Io Sono didn’t catch my eye.
So here we are, a day late and a dollar short:
Will stop “the race to the bottom”: G7-countries agree on minimum corporate tax rate
DR.dk, June 5
Economists see G-7 agreement on corporate tax as historic. The agreement will enable the closing of tax shelters
Information.dk, June 7
Powerful countries want to set common tax minimum, but will it succeed at all?
TV2.dk, June 5
Global tax agreement is historic and groundbreaking, but will hardly send more money into Denmark’s coffers
Berlingske.dk, June 7
If you want someone to blame, look no further than America’s Secretary of the Treasury, Janet Yellen.
Because Donald Trump’s corporate tax rates had boosted the American economy to hitherto unprecedented growth, and had created record employment, and and had produced unprecedented real income gains in the lower and middle classes, those things were obviously bad and had to be undone by the kinder, gentler, economically retarded Biden administration.
And so Yellen (who, by the way, is the first Secretary of the Treasury with a vagina, which obviously ought to offset whatever damage she does) announced in Chicago at an April 5 meeting of the Council of Global Affairs that there should be a global minimum corporate tax race to end the “race to the bottom” with respect to corporate tax rates.
That “race to the bottom” was, it’s worth pointing out, creating prosperity and growth around the world.
There was method to her madness: her boss wanted to raise America’s own corporate tax rate from 21% (which is what the Dread Tyrant Trump had slashed them down to) up to 28%. An increase of that magnitude is sure to have consequences, but if every other country had to hike their corporate taxes, too, then the fallout might not be so bad in America.
I wrote an entire post about it: “The Biggest Cartel in History.” I got a little saltier than usual because the very idea of wealthy nations joining forces to do something that’s actually illegal in any other context—it’s price-fixing—struck me as almost unthinkably stupid.
I don’t like quoting myself—I don’t mind quoting myself, but I don’t like the look of it—but I’m lazy enough not to want to find entirely new ways of saying something I’ve already said with something close to actual clarity:
If Yellen’s thoroughly brainless or diabolically evil suggestion is embraced by the other big economies of the world (which I certainly hope won’t be the case), and if they go ahead and establish a global minimum corporate tax rate, they will be guilty of collusion. Price-fixing. An anti-competitive practice that would if carried out by people or corporations be a crime.
They would have established the world’s largest cartel.
I understand governments aren’t beholden to the same laws as people or corporations: we need look no further than their monopoly on the use of force to see that. Only the most deranged anarchists would argue that because governments can drop bombs on foreign targets, so should we all be allowed to. But we generally concede these differences because they’re in our interest as citizens. Yellen’s proposal is unique in that it would be governmental collusion against the interests of their own citizens.
If our governments were really looking out for us, maybe they’d work out an agreement on a global maximum income tax?
You won’t normally find me in philosophical agreement with international anti-poverty groups, most of which support policies that do more to lock people into perpetual poverty than lift them out of it, but I’m with them on this one:
Anti-poverty groups criticise rich countries over G7 tax deal
Reuters.com, June 7
From the article:
Anti-poverty campaigners on Monday criticised a deal reached by seven wealthy countries to impose a minimum tax on multinational companies, saying it would benefit rich nations at the expense of the poor.
Finance Ministers from the Group of Seven advanced economies agreed on Saturday to back the creation of a global minimum corporate tax rate of at least 15%, aiming to squeeze more money out of multinationals such as Amazon and Google and reduce their incentive to shift profits to low-tax offshore havens.
Oxfam and Eurodad, a network of development agencies, said the new regime would entitle big companies’ home countries, often in the United States or Europe, to a larger share of the tax, leaving little for poor states where multinationals also operate.
“The G7 is a small club of rich and powerful countries,” said Tove Ryding of Eurodad. “They have a big interest in standing together. They have written a deal that benefits them.”
The G7 is not behaving like a small club: it’s behaving like a criminal enterprise. Its members are tired of having to compete for revenue. Competition is for suckers. Sure, it lowers prices, spurs innovation, and has created more wealth and freedom for more people than anything else known to man, but it puts a limit on how much protection money nations can demand of their client corporations.
A benevolent, pro-consumer, pro-citizen G7 would be talking about a maximum corporate tax, or, as I noted in April, a maximum personal income tax.
The G7 is not benevolent. They are not pro-consumer. They are not pro-citizen. They are pro-government. Pro-power.
They’re no different than the mobster thug Paulie in Goodfellas: consider narrator Henry Hill’s assessment of how the protection money racket worked:
Now the guy’s got Paulie as a partner. Any problems, he goes to Paulie. Trouble with the bill? He can go to Paulie. Trouble with the cops, deliveries, Tommy, he can call Paulie. But now the guy’s gotta come up with Paulie’s money every week no matter what. Business bad? Fuck you, pay me. Oh, you had a fire? Fuck you, pay me. Place got hit by lightning huh? Fuck you, pay me.
That’s what Janet Yellen’s saying. It’s what the G7 is saying. It’s what the entire international order is saying:
Fuck you, pay me.
Note the way the Danish headlines swarmed around the “historic” and “ground-breaking” nature of the agreement.
Those are value-neutral adjectives. Dropping an atomic bomb on a civilian population was pretty historic, and literally ground-breaking, but it’s not the kind of thing you want to see happen to your own hometown, is it?
But “historic” was clearly the talking point that went out: go ahead and do a search on “historic G7” in the news tab of whatever browser you use, in whatever language you want, and behold the harmony of the choir all-too-visible.
This is a stupid agreement. It’s an assault on consumers. It should not be enacted. It should be rejected loudly and forcefully, and any government supporting its ratification should be sent packing.
But it won’t be rejected, and no government will be sent packing, because by and large the citizens of the west have lost their sense, their principles, and their backbones.
“Fuck you,” the man says, “pay me.”
And they reach for their wallets.