Here‘s what’s wrong with a Minimum Global Tax on MNEs (Multinational enterprises)
❌It deprives individual countries from one of the principal tools to attract inward direct investments. In other words: it keeps the rich countries rich.
Countries who don’t have a prime location, little or no natural resources, unfertile land and sparsely populated, rely heavily on exported products & services. To be able to export it needs foreign investors. If this country would be forced to impose a high corporation tax, it would be nearly impossible to attract investors. Because investors will choose to instead invest in a country with a stable system, lots of raw materials and infrastructure that is up to standard. Makes sense?
❌First thing that companies do when faced with increased taxes is reducing other costs by cutting jobs, cutting down on pay raises for workers, delaying or scrapping investments in new machinery and equipment..
❌The increase in corporate taxes falls in the end on the shoulders of the consumer. Who pay what is not decided by financial ministers but simply by the invisible hand of demand and supply. It’s basic economic.
❌It is hard for politicians who want to be re-elected to tell citizens they need to pay more taxes. It’s easier to instead tax corporations who have no voting rights… but what politicians won’t tell you is that high corporate taxes DO impact your personal finance situation through the value of the stock in pension plans, the impact on investments by companies and job creation, the net amount of dividend income from personal investment in stocks..
❌publicly listed companies were small businesses at some point too and increasing tax rates based on the size might discourage growth and expansion of companies.
❌Does anyone care about all the international government institutions that are located in diplomatic centres such as Brussels, New York and Geneva who pay 0 taxes (both institutions and staff) because they enjoy tax immunity? NOPE. My point is that notwithstanding the fact that they pay no taxes, they generate enormous amounts of derived activity and jobs that generate A LOT of revenue. Why is this any different than large multinationals? 🤷♀️
source: instagram / wanderees.wealth