(Headline USA) A cabal of liberal bureaucrats, leftist activists and career politicians has endorsed a scheme for wresting even more money from large companies and their stockholders, including a 15% minimum corporate tax rate that could haul in hundreds of billions of dollars for government spending sprees around the globe.
The deal, which is purposed to bilk multinational companies from storing profits in low-tax countries, was announced Friday by the liberal Paris-based Organization for Cooperation and Economic Development, which hosted the talks that led to the agreement.
Endorsed by 136 countries, the scheme would allow countries to tax some of the earnings of companies located elsewhere that make money through online retailing, web advertising and other activities. The OECD said that the minimum tax would reap some $150 billion for governments.
Anti-poverty and tax fairness advocates have said the bulk of new revenue would go to wealthier countries and offer less to developing countries that are more dependent on corporate taxes, as well as taking more money from taxpayers and shifting that wealth to government control.
President Joe Biden, currently hustling a massive infrastructure boondoggle and plans to balloon the domestic corporate tax rate, pushed for the globalist agreement, and Treasury Secretary Janet Yellen said it was a great way to keep some countries from trying to offer sensible corporate tax rates as a means of attracting companies.
The deal faces several hurdles before it can take effect. U.S. approval of related tax legislation proposed by Biden will be key, especially since the U.S. is home to many of the biggest multinational companies. A rejection by Congress would cast deserved scrutiny over the entire project.
The big U.S. tech companies like Google and Amazon have supported the OECD negotiations. One reason is that countries would agree to withdraw individual digital services taxes they have imposed on them in return for the right to tax a part of their earnings under the global scheme.
That means the companies would deal with just the one international tax regime, not a multitude of different ones depending on the country.
On Thursday, Ireland announced that it would join the agreement, ditching a low-tax policy that has led companies like Google and Facebook to base their European operations there. Developing countries have raised objections and Nigeria, Kenya, Pakistan and Sri Lanka have indicated they will not sign up.
The deal will be taken up by the Group of 20 finance ministers next week, and then by G-20 leaders for final approval at a summit in Rome at the end of October.
Countries would sign up to a diplomatic agreement to implement the tax on companies that have no physical presence in a country but earn profits there, such as through digital services. That provision would affect around 100 global firms.
The second part of the deal, the global minimum of at least 15%, would apply to companies with more than $864 billion in revenue and be passed into domestic law by countries according to model rules developed at the OECD.
A top-up provision would mean tax avoided overseas would have to be paid at home. So long as at least the major headquarters countries implement the minimum tax, the deal would have most of its desired effect of providing a larger purse of money for governments.
Adapted from reporting by the Associated Press