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AMY GOOD MAN: Finance ministers from seven of the world’s richest nations have backed a plan to set a minimum global corporate tax rate of at least 15% for multinational corporations. The agreement was reached during a G7 meeting in the UK. That’s the group of 7th Treasury Secretary Janet Yellen praised the deal.
Treasury SECRETARY JANET YELLING: The G7 took significant steps this weekend to end the existing damaging dynamic and made commitments today that will provide a huge boost to achieving a robust global minimum tax of at least 15%. … This global minimum tax would end the race to the bottom in corporate taxation and ensure fairness for the middle class and working population in the US and around the world.
AMY GOOD MAN: Oxfam criticized the G7 agreement, saying in a statement, Quoting: “It is absurd for the G7 to claim that they are ‘overtaking a broken global tax system’ by introducing a global minimum corporate tax rate that gives way to those levied by tax Sentences resembles oases like Ireland, Switzerland and Singapore. They set the bar so low that companies can easily exceed it. “
For more, we go to Joseph Stiglitz, Nobel laureate in economics. He is a professor at Columbia University, chief economist at the Roosevelt Institute, chaired the Council of Economic Advisers under President Bill Clinton and chief economist at the World Bank. He recently wrote an article in the Financial Times entitled “G7 leaders can deal a blow to global corporate taxation”. He comes to us from Cadaqués, Spain, the birthplace of Salvador Dalí.
Joe Stiglitz, thank you for joining us again on Democracy Now!
JOSEPH STIGLITZ: Nice to be here.
AMY GOOD MAN: So why not start by talking about what the G7 agreed and why you think they have failed to hold companies accountable?
JOSEPH STIGLITZ: Well, let’s be clear, it’s historical. We haven’t had an agreement like this yet, a beginning of change. But at the same time it is insufficient. They adopted very useful language. They said “at least 15%”. France argues for more than 15%, Oxfam. I believe very strongly – I am part of an international civil society group working on reforming the multinational tax system and we have been in favor of a minimum tax of 25%.
The danger is that if the tax rate is too low, this minimum tax will de facto become the maximum tax, the actual tax. And that’s why, for example, Oxfam has raised concerns that the rate is actually not that different from some of the lowest rates in the world. On the other hand, they forget that the amount actually paid does not correspond to the official tax rate. You know, Google, Apple, all of these companies that make the products we love are also tax avoidant. And the tax rate Apple paid in Ireland, for example, was not 12.5%, which is the official tax rate, but a fraction of 1%.
AMY GOOD MAN: Let me say what French Finance Minister Bruno Le Maire said about the minimum corporate tax rate of 15%, which is just a starting point.
BRUNO THE MAYOR: [translated] There will be taxation on tech giants. There will be a worldwide minimum corporate income tax to prevent tax evasion and tax avoidance, which our fellow citizens rightly indignant. It’s an ambitious deal. We have agreed a minimum rate of 15% for corporate income tax. And I’ll say it again: at least 15%. It’s a starting point. And in the months ahead we will fight to keep this global minimum corporate tax as high as possible.
AMY GOOD MAN: This is the French Finance Minister Bruno Le Maire. Joe Stiglitz?
JOSEPH STIGLITZ: I think he’s absolutely right. We should consider this the minimum of the minimum. We need a minimum tax rate; otherwise there is this global race to the bottom, which has been going on for a very long time. And what the G7 has done is stop this race to the bottom. And it will be crucial that Bruno Le Maire’s view, the view that I have held, has to be much higher than 15%.
There is one more provision in the G7 that I want to draw your attention to, which is that it was very difficult – still very difficult – for countries to tax the new digital giants because there was a provision that said you should couldn’t collect a tax if there is no physical presence in the country. These were rules put in place before the internet days that illustrate that the international tax framework for multinational corporations has been horribly broken. And what they start is completely inadequate again, but it is at least a start to ensure that the digital giants are taxed.
AMY GOOD MAN: I wanted to ask you about it, as pointed out in the Guardian, among others, experts who have raised concerns that Amazon may not have to pay significantly more taxes in some of its largest markets unless world leaders fill a large void in a historic global agreement. A ministerial communiqué suggests the deal only applies to profits that exceed a 10% margin, which Amazon could rule out.
JOSEPH STIGLITZ: Well, I guess the whole scope of saying the rules only apply – in fact, only 20% owe the profits of more than 10% [inaudible]. The fact is, corporate profits are all surpluses, monopoly profits because you allow the cost of capital, labor, and all other costs to be subtracted. So economists call this pure profits, monopoly rents. And all should be subject to the new rules. So, like the minimum tax, it can only – the positive side is seeing this as a start in an arena where it was really, very difficult to reach an agreement.
AMY GOOD MAN: And finally, back in the United States, I don’t know how much attention you’re paying to what’s happening here right now, but Biden suggests scrapping his corporate tax rate hike plan if Republican lawmakers endorse at least a trillion new dollars Infrastructure spending. He had previously called for Trump’s corporate tax cuts to be reversed by increasing the rate from 21% to 28%.
JOSEPH STIGLITZ: Well, I think Biden’s first suggestion was absolutely correct. And, as I and others have pointed out, raising corporate taxes is a matter of fairness but also of efficiency. The fact is that lowering the tax from 35% to 21% did not lead to more investment; it only resulted in more share buybacks. An increase in the tax from the current 21 to 28% will not have a negative impact on investments, especially if we can achieve global cooperation so that there are no incentives for relocating investments abroad, because the tax rate – the tax structure enables that Investment deductibility, including [inaudible], as we saw. So I am very disappointed that you are thinking – even thinking about – giving up this important purpose.
AMY GOOD MAN: Joe Stiglitz, I want to thank you for being with us, Nobel Prize Winner, Professor at Columbia University, Chief Economist at the Roosevelt Institute, Past Chairman of the Council of Economic Advisers under Bill Clinton, and Chief Economist at the World Bank. We link to your article in the Financial Times: “The leaders of the G7 can deal a blow to the global corporate tax.”
Next, let’s look at how the Biden administration gave the New York Times a gag order when the Trump Justice Department began receiving the email records of four upcoming Times reporters.[break]
AMY GOOD MAN: “We Shall Overcome,” sung by legendary singer and activist Joan Baez, who was celebrated with a host of others at the 43rd Kennedy Center Honors during a ceremony that aired on Sunday night and which featured Democratic Senator Joe Manchin the civil rights sang anthem. Manchin said on Sunday that he was planning to vote against comprehensive electoral reform, the For the People Act. Baez attended the ceremony with Capitol Police Officer Michael Fanone as her special guest. Baez said in January of the honor, quoting: “It’s been a pleasure doing art. It has also been a joy of my life causing “good trouble,” as the late Congressman John Lewis put it. How lucky to have been born able to do both; each gives the other strength and credibility, ”said Joan Baez.