Taxes have played an interesting role in history. Taxes have grown countries into global superpowers, but they’ve also been major contributors to revolutions and wars around the world. In today’s landscape, you have countries who have a high tax percentage on individuals and corporations, countries that are in the middle, and countries that don’t tax that much. These countries are referred to as tax havens, where companies do some sort of business to earn more profit. It seems scummy, and it kind of is, but companies are looking for maximum profit, and this helps them achieve that.
Governments want to stop this, though, and that happens through a global tax rate. Over the weekend, about 140 countries agreed to a global minimum corporate tax rate of 15 percent with the goal of raising tax revenue and mitigating the effects of tax havens around the world. This requires companies to pay a 15 percent tax on revenue made in the countries they do business in, even if they aren’t physically present there. For example, Amazon is used in many countries, but they only pay taxes in the United States. Well, at this point that’s mostly not true, but it holds true in theory. They hope to implement this by 2023, but there are some obvious roadblocks. First, you are going to need US support, and that looks iffy. The Democratic Party supports this, and the Republican Party heavily opposes it. Classic partisanship. Other countries also need to hop on the bandwagon, and friction between the European Union and the US isn’t helping. Global policy is very complicated, so we’ll see how this plays out in the coming months. What is your opinion on the idea of a global tax on corporations?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.