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IPFS News Link • Economics: Austrian

The Global Minimum Corporate Tax Exposes The G-7's Hypocrisy

•, by Robert Zumwalt

Nonetheless, we are continually told by political and academic "experts" that unregulated economies inevitably give rise to monopolies, business trusts, and cartels, all of which they assure us have disastrous consequences for ordinary people. Therefore, we are told, governments are justified in taking forceful action to prevent monopolies from developing or to break them apart.

In this debate, the interventionists frame themselves as opposing the anticompetitive forces of large corporations having too much control over the lives of ordinary people. It is noteworthy, then, that these same interventionists support similar kinds of anticompetitive practices, and the increased control over people's lives they entail, when they are employed by governments instead.

To that end, the leaders of the G-7 nations have recently gathered to propose a global minimum corporate tax that would allow national governments to exert a form of monopoly power of their own over the taxation of business within their borders. A major element of the proposal, if brought to fruition, is the requirement that every nation impose a minimum corporate tax rate of at least 15 percent. The clear purpose of this part of the proposal is to eliminate the so-called race to the bottom in corporate taxes, which is a euphemism for high-tax nations' hopes of shielding themselves from competition from nations with low tax rates seeking to attract businesses away from them.

For this proposal to have its intended effect, several nations outside of the G-7 would need to voluntarily raise their corporate tax rates. Ireland, for example, sets corporate taxes at 12.5 percent, and a substantial part of its tax base is located there specifically because it is a comparative tax haven. Other parts of the proposal therefore appear to be intended to induce low-tax nations like Ireland, who are not likely keen on raising their tax rates and losing the main attraction they have for multinational companies headquartering there, to participate.