July 15, 2021 10:22 a.m. ET
Janet Yellen, US Treasury Secretary, arrives for a meeting of European Union Finance Ministers of the Eurogroup in Brussels, Belgium on Monday, July 12, 2021.
Valeria Mongelli / Bloomberg News
In “It’s Still a Bad Global Tax Deal” (July 9th), the editors sharply criticized an agreement by 132 governments to revise global tax regulations in order to meet the challenges of the digitization of the economy. The leading article speaks of a “tech tax”, alluding to the preliminary agreement on the redistribution of certain taxation rights. However, it fails to mention a clear benefit and main driver of these negotiations: the elimination of unilateral tax measures that seek to foreclose the digital economy and target US businesses.
While lawmakers and industry alike need time to evaluate the deal, it offers a promising opportunity to halt unilateral taxes on digital services already adopted by France, Turkey and India and most recently pursued by Canada and the European Union. These measures, labeled as discriminatory by both the Biden and Trump administrations, undermine the international tax system and jeopardize predictability for global corporations.
Information Technology Industry Council
The taxation of corporations is known to be inefficient due to the ramifications of double taxation of capital. From the US Treasury Department’s narrow perspective, the global minimum corporate tax treaty may look like a good deal. It will make it easier for the IRS to take a larger share of taxes from the US economy in exchange for allowing foreign governments to take a share of the American economy as well as their own. But from the perspective of the American public, this is a lose-lose proposition.
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Appeared in the print edition of July 16, 2021 as “Who gets taxed on whom in Yellens Big Deal?”.