So what are tax havens, anyway? The EU tells us:
“Tax havens” provide taxpayers, both [corporations] and natural persons, with opportunities for tax avoidance, while their secrecy and opacity can also serve to hide the origin of the proceeds of illegal and criminal activities.
They’re not a small problem. As the IMF reports, governments lose half a trillion dollars or more every year to them:
Tax havens collectively cost governments between $500 billion and $600 billion a year in lost corporate tax revenue, depending on the estimate.
When some people get to avoid taxes, the burden is heavier on the rest of us. And it’s not easy to fight tax havens, since most are abroad and the mega-rich are always finding new ways to hide their money.
But Biden has worked hard on this from the early days of his administration:
NYT: Global Deal to End Tax Havens Moves Ahead as Nations Back 15% Rate
The world’s most powerful nations agreed on Friday to a sweeping overhaul of international tax rules, with officials backing a 15 percent global minimum tax and other changes aimed at cracking down on tax havens that have drained countries of much-needed revenue.
The Organization for Economic Cooperation and Development, which has been leading the negotiations, said the new minimum tax rate would apply to companies with annual revenue of more than 750 million euros ($866 million) and would generate around $150 billion in additional global tax revenue per year. [ . . . ]
The agreement is the culmination of years of fraught negotiations that were revived this year after President Biden took office and renewed the United States’ commitment to multilateralism. Finance ministers have been racing to finalize the agreement, which they hope will reverse a decades-long race to the bottom of corporate tax rates that have encouraged companies to shift profits to low-tax jurisdictions, depriving nations of money they need to build new infrastructure and combat global health crises.
The United States, which proposed the 15 percent minimum corporate tax rate, has long looked for ways to minimize incentives for companies to shift profits abroad to lower their tax bills. As the Biden administration prepares to try to raise corporate rates in the United States, getting a global minimum tax in place has become critical to prevent companies from simply moving their headquarters overseas.
As the White House recently reported, Joe Biden is working to implement the international anti-tax haven agreement by raising the tax rate on what US multinationals earn overseas not just to 15%, but 21%:
Many of our international partners, including many of the world’s largest economies, have implemented or will soon implement this transformational agreement. The President’s Budget proposes to do the same by reforming the international tax system to reduce the incentives to book profits in low-tax jurisdictions, stopping corporate inversions to tax havens, and raising the tax rate on U.S. multinationals’ foreign earnings from 10.5 percent to 21 percent. These reforms would ensure that profitable multinational corporations, including Big Pharma, pay their fair share.
Is there still more work to be done? 100%! Lots more work. But Biden did more than many people guessed could be done. He deserves a lot of credit. AND he deserves to be re-elected.
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These posts are written by Goodnewsroundup (Goodie),
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