Last Saturday (June 5), the finance ministers of the G7 had an important meeting in the UK. It was important because they reached an agreement to achieve a minimum global business tax of 15% worldwide. It doesn’t matter where you, the company, are registered, as long as you have business in that country, this 15% global tax will have to be paid.
The U.S. is in the middle of this, playing a key role in driving it, because Biden wants to push his $20,000 trillion plus infrastructure plan, the largest in U.S. history. Where is this much money coming from? From the U.S. companies to raise taxes there to come, but also afraid that these companies fled to low-tax countries, so that the “chicken can not lose rice”, so first engage in a global tax, the back road is broken. In this way, the big companies can not move at any time, only to be slaughtered.
A global tax sounds like a good idea to keep big multinational companies from taking advantage of it. It is true that some countries offer very low tax rates to attract big foreign companies to invest in order to attract investment and improve the employment rate. Those big companies are also happy to shift their profits to countries with low or no tax rates to avoid taxes.
However, this seemingly perfect decision always seems to be a little bit weird. Let’s not forget that it also seemed perfect to engage in globalism and global trade more than 20 years ago, to bring the Chinese Communist Party into the World Trade Organization, and to decouple human rights from trade. The theory at that time was that as the advanced Western countries helped China’s economy grow, a huge middle class seeking democracy would be born in China, and the CCP would move toward democracy and automatically end its authoritarian dictatorship. As a result, more than 20 years later, the United States and the West have found a massive loss of manufacturing jobs to China, a shrinking middle class in the United States and the West, and a China that has become the second largest economic entity in the world. The Chinese Communist Party is not only as dictatorial as ever, it has become more so, controlling the faces and wallets of the entire population. And those Chinese people who seek democracy have long been locked up in the CCP as laborers in some prison.
Another bizarre phenomenon is that the big tech giants, like Amazon, Facebook and the like, have issued statements welcoming the decision and can’t wait to pay this global business tax. These every turn profits to the sky not spit to avoid tax ruthless character, how suddenly so generous up to pay global taxes? In fact, if there is too much money to put, you can take the initiative to hand over to the local government, there is no need to wait until now, right?
Of course, just the G7 agreed to the global tax, far from enough, there are almost 200 countries in the world, just 7 countries to engage in 15% business tax, large companies and a large number of countries to evade taxes. So the next step is the G20 summit in July to get these 20 countries through, so that it will be time to convince the Chinese Communist Party that it is a member of the G20.
The Chinese Communist Party has always boasted that it is the pioneer of globalization, and that is true, and it is the Chinese Communist Party that has benefited the most from globalization. But will the CCP be so globally minded this time? Not really. When the developed Western countries raised global taxes on big companies, the CCP simply rejoiced that the opportunity had come again. The first two years by the U.S. Trump administration tax cuts to attract the return of so many U.S. companies, now is not a good time for them to return to the arms of the party mother to help the party to replenish blood? So, G7 or G20, don’t be naive to think that the CCP is a globalization leader and will definitely agree to do global tax. Alternatively, the CCP can make a superficial statement, after all, the CCP has become very good at faking; but it is unlikely that the CCP will really cooperate.