President Joe Biden holds a news conference at the end of the G7 summit in Newquay, England, June 13, 2021. (Kevin Lamarque/Reuters) At a time when our nation’s recovery hangs in the balance, we should not allow the federal government to take drastic steps to permanently grow the size and scope of the U.S. government.
World leaders from the G-7 recently announced their support for the Biden administration’s plan to implement a global minimum corporate tax of at least 15 percent. The plan would effectively eliminate tax competition and create a government taxation cartel — companies could no longer vote with their feet and move to more tax-advantageous countries to grow their businesses. The Biden administration led the charge, and European leaders from high-tax countries with hugely inflated welfare spending embraced the proposal. Whenever European leaders cheer for an American policy proposal, it’s usually safe to assume that this means bad news for everyday Americans.
Treasury secretary Janet Yellen and other world leaders successfully got buy-in from 130 countries — at least in principle. The enforcement of the new global tax regime will be complicated, with an abundance of loopholes available to governments that would like to be more competitive in international markets.
Secretary Yellen has previously pushed the corporate global minimum tax agreement, arguing it is needed to “end the race to the bottom” and “make all citizens fairly share the burden of financing government.” What’s another term for a “race to the bottom”? It’s competition — the very principle Democrats and Republicans agree is missing from Big Tech and other industries. For some (political) reason, when the Biden administration has to compete, all that talk of the benefits of vigorous competition for American consumers and workers falls by the wayside.
The term “race to the bottom” is a not-so-clever mask (no pun intended, 2021) for Yellen’s real goal: to end tax competition. Putting a floor on the cost of government is like putting a floor on the cost of any other product. It’s bad for consumers. And in this case, it’s bad for businesses and workers.
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