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That's one way to look at it.
Another is to recognize Yellen sees the problem, and the problem is high corporate taxes. This is good news, since Yellen & Co have spent time and money saying high corporate taxes do not create a problem.
Game. Set. Match.
The problem is the ability for corporations to shift operations to countries that engage in massive human rights violations and use slave labor. The answer is NOT to do away with protections that have created safe and humane working conditions. That’s a race to the bottom solution. Instead, we find ways to make it so decisions to shift work to countries that mistreat employees ends up costing corporations more than it would
To stay in the US.
The goal of this is to discourage companies from moving their nominal country of business to places that have low, or no, taxes. For example, Microsoft, Apple, and other tech companies have transferred ownership of much of their intellectual property to companies incorporated in Ireland, which has a much lower tax rate than the US, UK, etc. Those Irish companies charge huge dollars for other subsidiaries to use the IP, lowering the taxes paid to the US, with a resulting windfall to the companies, even though nothing actually changes in the business.
The world would be better if it operated with a set of minimal rules. Mankind has the reached the stage in development where corporations, pollution, and climate change crosses borders.
The world would be better if it operated with a set of minimal rules. Mankind has the reached the stage in development where corporations, pollution, and climate change crosses borders.
Those rules are called treaties or contracts between different countries.
When the people responsible for administering government don’t understand basic math than we are doomed. We can only blame ourselves as we continue to elect fools on both sides of the isle.
Because anyone who works in tax, or knows tax, knows that the rules won't actually work as a minimum tax; they will just be an extra tax.
For example, the Trump rule called "GILTI", which was actually not a tax cut but a payfor for some of the other cuts, was billed as a 10.5% minimum tax. They said "as long as you pay more than 13.125% in foreign taxes, you won't have an extra tax". However, when the accountants sat down to apply it you had companies with very high tax rates still paying up to an additional 10.5% tax on their foreign income.
It's insane- I work at a company that has a very high foreign tax rate because it does business in high tax jurisdictions like France, yet because of this obscure area in the code called "expense apportionment", it is still subject to additional tax. So 32% tax in France is not enough to satisfy the "minimum tax"; the IRS takes another couple percent.
And that's a republican rule! The scary thing is that the democrats are saying that this isn't enough for them, they want higher US taxes on our already heavily-taxed French income. They call GILTI a "gift" to businesses. We paid no additional US tax on our French income before GILTI- if this were a gift, we'd politely decline.
So this 15% global minimum tax is just going to be a disaster. Even really abusive companies often have effective rates higher than 15%, so they wouldn't be pushing it unless they knew that it would result in additional tax revenue.
Lastly, it's a jerk move. The Americans come to the world stage and say "our tax rate is roughly the same as the average developed nation (21% plus approx 4% state = 25%), but we want to raise our tax rate and we don't want other countries to look better than us, so let's all raise our taxes". And "hey Ireland and Singapore- we don't like that your economy is growing due to your business-friendly, competitive tax environment, so we're going to band together and make sure that you aren't as attractive as you once were."
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