G-7 Corporate Tax Agreement

Chris EdwardsLeaders of the G-7 countries agreed on the weekend to pressure other countries to impose corporate tax rates of at least 15 percent. They also agreed to reallocate the earnings of some multinational corporations if too much was deemed to be in low ‐​tax countries. The impetus for the agreement is a claimed revenue shortage caused by corporate tax dodging, especially by large technology companies. The G-7 countries are Canada, France, Germany, Italy, Japan, United Kingdom, and the United States.At the G-7 meeting, U.S. Treasury Secretary Janet Yellenalleged that the agreementwould “end the race to the bottom in corporate taxation and ensure fairness for the middle class and working people in the US [and] around the world.” And shesaid recently that a  global minimum corporate tax is “about making sure that governments have stable tax systems that raise sufficient revenue. ”A Bloomberg story fawning over Yellensaid the new agreement “would signal an end to decades of nations racing each other to lower levies, eroding their collective revenues.”However, Yellen and the reporters who cover her should look at the data. It does not show eroding or insufficient revenues overall.The chart below shows corporate tax revenues as a  percent of GDP for the G-7 countries from 1965 to 2019. Despite huge increases in cross‐​border investment, the rise of the Internet, and the mobility of modern industries, corporate tax revenues have hovered in roughly the ...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs