I Support Biden's Global Minimum Tax, But I'm Not, Like...ENGORGED Over It
Progressive principles and thirst for corporate taxes don't totally match
As a Democrat, I’m supposed to have a major hard-on for corporate taxes. I’m supposed to pump my fists when Elizabeth Warren rolls out her latest “Wall Street is bad!” talking point. I’m supposed to be really into the Panama Papers, and treat Gabriel Zucman like he’s the goddamned Dalai Lama, and pretend to be furious at Amazon while still buying stuff from them three to five times a day.
The truth is: I’m just not feeling it. I do support Biden’s effort to raise corporate taxes, including his effort to create a global minimum tax. Because, hey: revenue's gotta come from somewhere. Corporate taxes are popular, and they're not my least favorite tax. But this corporate tax push just doesn’t inflate my dingy, because I know there are more progressive and efficient ways to achieve the same ends.
Let me quickly run through Biden’s plan…
Trump lowered the corporate tax rate on domestic profits from 35 percent -- which was the highest nominal rate in the OECD1 -- to 21 percent. Biden wants to raise it to 28 percent, which would put us in the high-middle of the pack (of nominal rates -- our actual rate is much lower). That’s the easy part; the tricky part comes from profits earned abroad. Exactly how we tax companies’ foreign earnings is one of the few topics too boring even for this blog, but the current system is that we kinda tax foreign profits (and the word “kinda” is doing a ton of work here) at 10.5 percent. Biden wants to raise that to 21 percent and take some weight out of the “kinda”. The idea is to collect some money from companies who shift intellectual property to a P.O. Box in Ireland (corporate tax rate of 12.5 percent) and then tell the IRS: “Faith and Begorrah, m’lad -- we’re a mostly Irish company, doncha know?”