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Yeah, you have to wonder if the US cares more about this framework being in place and being able to dictate other countries policies more than actual tax rates.

adventured 5y ago
It's not particular to the US. The US is doing this by pressure as a compromise because the European powers threatened something worse. The US would prefer to change absolutely nothing and let its major corporations continue to avoid taxes where they can internationally. Germany and France are overwhelmingly supporting this, because they benefit from damaging competing nations that have lower corporate income tax rates (eg Lithuania, Ireland, Hungary, North Macedonia, Montenegro, Romania, Serbia, Switzerland, Albania, Armenia, Bosnia, Bulgaria, Croatia). Both Germany (30%) and France (26.5%) have higher corporate income tax rates than the US and stand to benefit more by forcing the rest of the world to a higher base and or otherwise preventing any further decline in rates. This helps those two nations re-level Europe to their advantage, and stop any further race to the bottom on rates (where Germany and France can't follow). For those two nations it's a particularly relevant matter in Europe. They've watched as Ireland has rapidly become one of the richest nations in world history by leveraging a very low corporate income tax rate. Ireland is taking economy, growth, away from them. In the time that Ireland's GDP per capita has massively exploded higher, Germany has seen a GDP per capita decline over 26 years. Read that again. 26 years, an inflation adjusted GDP per capita decline ($31.6k in 1995; inflation adjusted that's $57k today; their present GDP per capita is around $46k). A generation has been nearly lost to economic stagnation in Germany. France is in the same stagnation boat. And how has Ireland's GDP per capita performed in that time? $19k to $84k; an inflation adjusted 150% gain roughly over 26 years. Yeah. Now you understand what's going on - it's about knee-capping countries like Ireland, stopping their incredible climb. Ultimately this corporate income tax rule is a regressive attack by powerful nations on typically poorer, weaker or otherwise smaller nations. It dilutes a substantial means for them to compete to draw capital. France and Germany on one side. All those other nations I listed before on the other. It's quite obvious what's going on.
- disgruntledphd2 5y ago
  Speaking as an Irish person, Ireland's GDP is nonsense and you should avoid using it for literally anything.
  - Rexxar 5y ago
    Paul Krugman agree: https://en.wikipedia.org/wiki/Leprechaun_economics https://en.wikipedia.org/wiki/Leprechaun_economics
- anonymousDan 5y ago
  This is bang on. Basically the US have been undercutting the EU for years ever since Clinton brought in the rules allowing companies to hold their profits offshore. Interesting figures regarding GDP, thanks. Regarding the headline rate of tax, although Germany and France have higher taxation rates, I think it's pretty well accepted that the effective rates are a lot less than the advertised rates. Also, as per the other sibling comment, Ireland's GDP figure probably isn't the best measure of domestic wealth. And another thing to note is that Ireland had a lot of catching up to do for historical reasons (i.e. it was basically rinsed for hundred of years by the UK, followed by a punishing trade war after independence). Having said that, I think this move is probably for the best. It will be interesting to see if it gets past Congress.

adventured 5y ago

It's not particular to the US. The US is doing this by pressure as a compromise because the European powers threatened something worse. The US would prefer to change absolutely nothing and let its major corporations continue to avoid taxes where they can internationally. Germany and France are overwhelmingly supporting this, because they benefit from damaging competing nations that have lower corporate income tax rates (eg Lithuania, Ireland, Hungary, North Macedonia, Montenegro, Romania, Serbia, Switzerland, Albania, Armenia, Bosnia, Bulgaria, Croatia). Both Germany (30%) and France (26.5%) have higher corporate income tax rates than the US and stand to benefit more by forcing the rest of the world to a higher base and or otherwise preventing any further decline in rates. This helps those two nations re-level Europe to their advantage, and stop any further race to the bottom on rates (where Germany and France can't follow). For those two nations it's a particularly relevant matter in Europe. They've watched as Ireland has rapidly become one of the richest nations in world history by leveraging a very low corporate income tax rate. Ireland is taking economy, growth, away from them. In the time that Ireland's GDP per capita has massively exploded higher, Germany has seen a GDP per capita decline over 26 years. Read that again. 26 years, an inflation adjusted GDP per capita decline ($31.6k in 1995; inflation adjusted that's $57k today; their present GDP per capita is around $46k). A generation has been nearly lost to economic stagnation in Germany. France is in the same stagnation boat. And how has Ireland's GDP per capita performed in that time? $19k to $84k; an inflation adjusted 150% gain roughly over 26 years. Yeah. Now you understand what's going on - it's about knee-capping countries like Ireland, stopping their incredible climb. Ultimately this corporate income tax rule is a regressive attack by powerful nations on typically poorer, weaker or otherwise smaller nations. It dilutes a substantial means for them to compete to draw capital. France and Germany on one side. All those other nations I listed before on the other. It's quite obvious what's going on.

disgruntledphd2 5y ago
Speaking as an Irish person, Ireland's GDP is nonsense and you should avoid using it for literally anything.
- Rexxar 5y ago
  Paul Krugman agree: https://en.wikipedia.org/wiki/Leprechaun_economics https://en.wikipedia.org/wiki/Leprechaun_economics
anonymousDan 5y ago
This is bang on. Basically the US have been undercutting the EU for years ever since Clinton brought in the rules allowing companies to hold their profits offshore. Interesting figures regarding GDP, thanks. Regarding the headline rate of tax, although Germany and France have higher taxation rates, I think it's pretty well accepted that the effective rates are a lot less than the advertised rates. Also, as per the other sibling comment, Ireland's GDP figure probably isn't the best measure of domestic wealth. And another thing to note is that Ireland had a lot of catching up to do for historical reasons (i.e. it was basically rinsed for hundred of years by the UK, followed by a punishing trade war after independence). Having said that, I think this move is probably for the best. It will be interesting to see if it gets past Congress.