If the titans of the food industry banded together to increase their profits by setting uniform prices for toilet paper, ground beef, and other goods, they would face a state criminal complaint and likely end up in jail. But when elected officials work together to manipulate markets to keep other people’s money flowing, things continue as normal.
Last week, the leaders of the so-called G-7 countries met in Europe to discuss various topics as the world begins to recover from the coronavirus pandemic. At the top of the agenda was a plan, promoted by President Joe Biden and his Brain Trust, to unilaterally disarm the struggle for global competitiveness by introducing a statutory minimum tax rate of at least 15 percent in major Western economies.
America first or last?
Progressives have denounced a “race to the bottom” in which nations seek to attract jobs and investment by setting tax rates that do not penalize entrepreneurs and successful businesses. But the freedom to escape criminal policy prevents governments – including the US Congress – from constantly raising taxes. A “minimum tax” – which will undoubtedly rise steadily and frequently – will create a “race to the top” that will stifle economic growth and increase poverty.
“Academic research shows that collecting higher corporate taxes is an extremely destructive method of generating income because it lowers investment and, consequently, worker wages,” notes Veronique de Rugy, senior research fellow at the Mercatus Center at George Mason University. “It also increases consumer prices. And let’s face it, no nation has ever gotten richer or better through higher taxes and wealth redistribution. “
The “minimal” tax game is part of the Biden government’s plan to seize $ 2 trillion from US corporations over the next decade to pay for the massive spending cut. The president is aiming to raise the corporate tax rate to 28 percent – a 33 percent increase – and realizes that if he can’t get the rest of the world to go along, that will result in a loss of investment.
Currently, “capital is being shifted to countries that offer the best package of public services such as infrastructure and education at the lowest tax costs,” notes Jack L. Mintz of Canada’s Financial Post. “It’s clear why governments don’t like this form of competition. They prefer to cartel the tax system so that they can impose taxes on multinational corporations to fund their expenses. But it’s not clear why citizens shouldn’t like that. “
If the Biden administration believes the US corporate tax structure needs reform, we should have a debate in Congress instead of locking the nation to policies that cover the ever-increasing corporate taxes that American companies face in the world market will disadvantage.