The Biden administration has just spent two years negotiating with a group of foreign countries to raise taxes on U.S. companies operating overseas. Now we’re being told it’s been “delayed” for two more years. But why delay a bad decision? It’s an awful idea that should be rejected out of hand.
“Americans have already been crushed by inflation caused by the Biden administration,” argued West Virginia congresswoman Carol Miller, in a recent op-ed. “But now, they want to add fuel to the fire by giving American taxes to foreign countries, raising costs for Americans, and sticking us with the bill for funding a global socialist agenda.”
Her analysis is spot on. The U.S. Treasury and White House have no business negotiating a deal to subvert America’s sovereignty and erode its economic power, which the accord with the 38-nation Organization for Economic Cooperation and Development (OECD), headquartered in the ultra-deluxe Château de la Muette in Paris, is clearly meant to do.
For the record, the U.S. already imposes a 10.5% minimum tax on U.S. businesses’ foreign income, and last year imposed a 15% “global minimum tax” on big multinational companies’ profits. And the standard corporate rate here in the U.S. is now already 21%, well above 15%. So what’s the issue?
Under the OECD “deal” that both President Joe Biden and Treasury Secretary Janet Yellen have embraced, there’s something called the Undertaxed Profits Rule (UTPR). That guideline basically would let other countries tax a U.S. company at a higher rate if the country determines that it is paying less than the 15% somewhere else. And the other country, not the U.S. taxpayer, gets the revenue.
The opportunity from this rule for global tax abuse and even graft are clear. Moreover, U.S. tax rates by law have always been determined by Congress and the president, not by foreign bureaucrats.
The fight has just begun, really. One of the ways the left gets you to hate big corporations is by claiming they don’t pay “their fair share.”
As we’ve noted in this space before, that line of reasoning is based on the time-worn fallacy that corporations actually pay taxes.
In fact, corporations don’t pay taxes. People — you — do. That’s not an opinion, it’s an economic fact. When a company pays more in taxes, it raises prices on you, lowers pay for its workers (you again), and reports smaller profits for its investors — which, if you have a 401(k) or IRA or other pension program, includes you.
But apart from taxing you more, a quick look shows that none of the overall impacts would be beneficial. Even estimates by the OECD itself show that both global investment and GDP growth would be less under its tax grab. So it’s not really about economics; it’s about control.
“Ultimately, these rules are primarily intended to undermine national sovereignty over tax law, grab revenue from the United States, and reduce the competitiveness of American workers and companies,” as Adam N. Michel, director of Tax Policy Studies for the Cato Institute, describes it.
Yes, America today is far from perfect. But even with America’s current problems, it remains economically far ahead of any of its competitors within the OECD, which is heavily European-centered (all but 10 of its members are in Europe). Even Bidenomics hasn’t ruined that, at least not yet.
Over the years, the eager socialist planners of the European Union and the OECD have vowed repeatedly to surpass the U.S. in growth and quality of life. Their socialist “growth” schemes have failed. It’s a big reason why conservative parties are showing big gains in recent elections.
Today, the U.S. economy accounts for 40% of the OECD’s total output of goods and services, despite having less than a quarter of its total population. And the U.S. still produces about 25% of global GDP, roughly the same as in 1995, despite China’s unprecedented growth surge, which is now ending.
Why are all those other countries lagging behind us? There are many reasons. But the main one is tax rates. According to the Tax Policy Center, “Total U.S. tax revenue equaled 24% of gross domestic product, well below the 34% weighted average for other OECD countries.”
Other OECD members might see that as something to brag about. But looking at the stark record, it isn’t.
And this is only the latest plan to make the U.S. less exceptional, and more mediocre. As the saying goes, “misery loves company.” That could be the motto for the global socialist movement.
Once the precedent is set of allowing other countries to tax us, where does it all end? In global bankruptcy, of course. But hey, at least we’ll all be equal.
Even Democrats don’t like the deal, which could cost hundreds of thousands of jobs. After Biden and Yellen negotiated the deal, Democrats last year refused to pass it.
Step by step, the globalists are pushing their scheme to have one big world government. The U.S. handing control of our tax code to those who have run their own economies into the ground and are now pursuing insanely costly green policies is just a Fabian first step.
But it’s a fatal one, because if not stopped now it will inevitably lead to greater poverty, shorter lives and still-deeper dissatisfaction among Americans
The House Ways and Means Committee has already held hearings, and will no doubt hold more in the future to halt or radically change the Biden-Yellen “deal,” which excluded congressional input. No doubt, more hearings are on the way.
Meanwhile, a post from the Committee’s website after a hearing earlier this month said it all: “Committee Members found the proposal would hurt American companies, kill American jobs, give Chinese Communist Party-sponsored businesses a global economic advantage, and surrender $120 billion in U.S. tax revenue.”
Sound like a good deal to you?
— Written by the I&I Editorial Board