(Maximusnd/iStock/Getty Images) The U.S. Treasury is effectively ganging up with international bureaucrats and like-minded foreign governments to bully countries into increasing their taxes.
The G-7 summit of the world’s largest economies was a display of big-government arrogance. In a blow to our form of government and independence, President Biden led a push to force all countries to increase taxes on income, foreign and domestic.
In a recent article co-written with four foreign counterparts, Secretary Yellen paid lip service to the principle that each government has the right to set its own tax policy. Yet the authors asserted that “exercising these sovereign rights together” to impose a global minimum tax would generate “a sustainable and inclusive recovery more effectively than if we stand alone.” What about countries with governments who disagree with Yellen that increasing taxes will improve productivity and economic growth? Not least a future U.S. president — or even the current Congress. An agreement by powerful countries and their allies to use “sovereign rights together” to effectively force dissenting countries to abandon a key element of their sovereignty looks a lot like imperialism to us.
Over the last several decades, countries have been steadily lowering their corporate-tax rates, spurring economic growth and expanding opportunity for workers. Some smaller countries, such as Ireland, have significantly lowered rates and dramatically boosted employment.
The U.S. Treasury is effectively ganging up with international bureaucrats and like-minded foreign governments to bully countries into increasing their taxes to a minimum rate of at least 15 percent. The administration apparently believes this would prevent its planned tax increases from causing an exodus of American companies and jobs.
But this theory doesn’t even meet its own premises, which are conceptually flawed and will in the end hurt consumers and workers.
In 2017, Congress changed the rules governing the taxation of the foreign profits of American companies. For U.S. companies that were most aggressive in trying to avoid tax by deferring their gains into the distant future, those rules imposed significant tax increases and gave the U.S. the world’s harshest regime for taxing income earned
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