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The G7 Agrees To Create a Global Tax Cartel

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17.06.2021

Taxes

Veronique de Rugy | 6.17.2021 12:23 PM

For several decades now, politicians around the world have tried to curtail tax competition to make it easier for them to increase the tax burdens on their citizens without them fleeing to other lower-tax jurisdictions. The best way to achieve their goal is to create a global high-tax cartel. If implemented, the recent G7 countries' agreement to impose minimum taxes on multinational companies would get them much closer to this shady objective.

It's no mystery why politicians don't like tax competition. In a global economy like ours, individuals and businesses are better able to work and invest in nations with lower tax rates. The ability to shift residences and operations from country to country puts pressure on governments to keep taxes on income, investment, and wealth lower than politicians would like. Politicians in each country fear that raising taxes will prompt high-income earners and capital to move away.

Politicians disparage this type of tax arbitrage with phrases like "race to the bottom" while every low-tax nation is labeled a "tax haven." These epithets are meant to obscure the fact that this is perfectly legal and ethical. It's annoying to our legislators who want to spend as much of other people's money as possible, even if it means grabbing some income that's earned outside of our borders and/or preventing other nations from offering lower rates to companies willing to do business within their borders.

Enter the global minimum tax, which seven of the wealthiest countries in the world have just agreed to. Back in March, the White House described the proposal as a way "to encourage other countries to adopt strong minimum taxes on corporations,........

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