The United States gives wings to the fiscal revolution | Economy

According to the Tax Justice Network (TJN), countries stop earning 206 billion euros each year due to the diversion of profits from multinationals to territories with little or no taxation. This body calculates that if the OECD accepted a minimum rate of 20%, only Spain would enter 4,300 million more per year, or nearly a quarter of what it collects in corporate tax. “Multinationals would be taxed at the minimum rate even if they transferred their profits to a zero-rate jurisdiction,” said Alex Cobham, CEO of TJN.

The problem of bypassing comes a long way. We are in 1933. The New York Times reveals that banker JP Morgan paid no income tax in 1931 and 1932. The news is criticized by the same president, Franklin Delano Roosevelt – with whom now so much is compared to Biden. The outraged tycoon alleges that avoiding taxes is not the same as avoiding them. Only the first is illegal; the second is the result of exploiting regulatory loopholes with a trick. The fault, in short, lies with the politicians, unable to fill the gaps in their taxation.

This anecdote appears in the book by economists Emmanuel Saez and Gabriel Zucman, The triumph of injustice (Taurus, 2021), and offers an image that has remained virtually unchanged throughout the last century. The big difference is that today, tax evasion has exploded thanks to the increasingly sophisticated tax engineering industry, which has grown in the heat of globalization and digitalization. Multinationals, tax havens and low-tax territories – some of them within the EU itself – are the winners of this model, which has eroded the tax bases and generated a race to the bottom of the economy. corporate tax rate.

Race down

Faced with competition from low-tax jurisdictions, other countries have reduced taxes to attract businesses: the average OECD business rate fell from 32.2% to 23.2% between 2000 and 2020 – 25% in Spain. In reality, much of what is siphoned off is empty income: 40% of global foreign direct investment is phantom, according to the IMF. In other words, he has no productive activity behind him.

Washington’s proposal, put forward by Treasury Secretary Janet Yellen, is part of an ambitious plan – which also includes raising the national corporation tax and setting a minimum effective rate of 15% on profits after tax – so that the economy of the United States recovers the leak after the pandemic. Fury has spread over a common problem. From the EU to the Spanish or German government, including the IMF, they applauded this initiative. The director of the Fund’s Fiscal Affairs Department, Vitor Gaspar, explains that fair taxation for multinationals is not only important for public funds: “Also because of the wider perception of tax fairness in corporations. companies. “

Zucman takes another step. If the US proposal is implemented, it will mean “a collapse” of the model on which tax havens are based. “It would not make sense for them to offer low tax rates,” he explains: “A high global minimum tax can change the face of globalization, causing its main winners, the multinationals, to change the face of globalization. pay more taxes, instead of paying less and less. as they have happened over the past four decades ”.

Agreement in summer

Pascal Saint-Amans heads the OECD’s Center for Tax Policy and Administration, which for years has tried to reach agreement in nearly 140 countries on a minimum corporate tax and a system that allows multinationals, especially digital ones. , to pay where they generate profits. Trump’s exit from negotiations last year froze the process, but Saint-Amans hopes the US shift will now lead to “fiscal peace” through a “comprehensive deal.” He is convinced of a political solution in July and has the technical details by October. “It’s the deadline. It’s now or never, ”he says.

The next few months will be intense. The OECD has considered a minimum rate of 12.5%, the same for countries like Ireland, a haven for multinationals and one of the back doors to divert profits to tax havens, which has previously been skeptical as to Biden’s plan. Saint-Amans specifies that there is still no consensus on the appropriate minimum rate, and that the negotiation now has another dynamic: “I do not know where to land, and that is part of the discussion”.

The US proposal also represents a step forward for multinationals to pay taxes where they produce profits, even if they are not physically present there. The EU intended to focus this program on technology companies – with the famous Google-; Trump, before leaving the negotiations, called for it to be applied to all consumer-oriented multinationals. Biden has tightened the barrier: around 100 groups, responsible for about half of global corporate profits. Countries like France or Spain, which have already unilaterally approved a digital tax, should withdraw it if there is consensus on this new paradigm, says Saint-Amans, who adds that the EU itself wants a pact. global: “I think it recognizes and respects the OECD process”.

The economista Jayati Ghosh, miembro de la Comisión Independiente para la Reforma de la Fiscalidad Corporativa Internacional (Icrict) – that pide un tipo mínimo del 25% -, coincides in that the propuesta of EE UU supone un cambio drástico that frenaría la carrera fiscal a The decline. “The OECD process has been going on for years with little real progress. Not because the solutions were not known, but because ultimately the political will was not strong enough among the developed countries, ”he says. But the United States is not just any player. If the pressure from Biden is strong, Ghosh believes the rules of the game will change: “Governments and citizens around the world have a lot to gain, and the power of some big corporations should not be allowed to prevent it.”