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Joe Biden gets a win on global taxes at his first G20 as President

Category: News
Submitted 30 day(s) ago
President Joe Biden's first day at the Group of 20 Summit began Saturday with the President achieving one of his core objectives for the global conference -- an endorsement of a 15% global minimum tax from world leaders.

The tax is a chief priority of Biden's that the White House believes would end the global race-to-the-bottom on corporate tax rates. The new rule will be formalized when the leaders release a final G20 communiqué on Sunday, when the summit ends.

All leaders of the G20 came out in support for a global minimum tax during the summit's first session, a senior US administration official said.

Joe Biden gets a win on global taxes at his first G20 as President

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"The President emphasized the importance of this historic deal during his intervention," the official said, referring to Biden's turn to speak during the meeting. "The President also mentioned that while we don't see eye to eye on every issue, we can tackle shared interests."

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Each individual nation must pass its own version of the tax, and it may take some time to implement worldwide. One hundred thirty-six nations agreed to such a tax in October, and Saturday's endorsement from 20 of the world's largest economies is seen as a step toward worldwide implementation.

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Italian Prime Minister Mario Draghi, the leader of this year's G20, said in remarks at the summit's start that the agreement was proof of the power of multilateralism.

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"We reached a historic agreement for a fairer and more effective international tax system," Draghi said, adding, "These results are a powerful reminder of what we can achieve together."

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The measure would tax large multinational companies at a minimum rate of 15% and require them to pay taxes in the countries where they do business. The Biden administration breathed new life into the global initiative earlier this year and secured the support of the G7 countries in June, paving the way for a preliminary deal in July.

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"In our judgment, this is more than just a tax deal. It's a reshaping of the rules of the global economy," a senior administration official said.

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Aspects of Biden's recently unveiled spending framework would enact part of the global minimum tax scheme, though the fate of that measure remains uncertain as Democrats haggle over timing. Biden administration officials have downplayed the effect that Democratic infighting has on Biden's ability to rally foreign leaders.

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"These world leaders really are sophisticated. They understand. There's a complicated process in any democracy to do anything as ambitious as we're pursuing in our domestic agenda," the senior administration official said. "These are multigenerational investments and, of course, we're trying to reform the tax code to pay for it. And so, you know, I think there's going to be a broad understanding that takes time."

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While the day started off with a win for Biden, he's facing a more skeptical global audience than he found the last time he trekked to Europe to meet with world leaders.

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Divisions within Biden's own political party are threatening to derail his entire economic agenda back home, and Biden himself has acknowledged the credibility of the United States and the future of his presidency are on the line.

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Despite urging lawmakers to give him a legislative win to tout on the world stage -- especially the climate change measures that would give his presence at next week's United Nations Climate Summit extra weight -- Biden has shown up in the Eternal City without a done deal. Added to that complication are the questions coming from some nations about Biden's commitment to working cooperatively on global issues in the wake of the US' chaotic withdrawal from Afghanistan.

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The President arrived at the summit site Saturday morning, stepping from his car and greeting Draghi. Biden posed for a family photo with the G20 leaders, along with Italian medical workers who joined the heads of state on the platform.

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World leaders also spent Saturday afternoon discussing the Covid-19 pandemic, global supply chain problems, high energy prices and combating the climate crisis, among other topics.

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Biden spoke during the meeting and "reminded G20 Leaders that new pandemics can arise any time so it is important that we strengthen global health systems and do more to create the global health security infrastructure to make sure we are prepared against the next pandemic," the official said.

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"The President stressed the need for balanced, well supplied, and competitive global energy markets so we don't undermine this critical moment of economic recovery," the official said.

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The official said Biden also "underscored his commitment to ending the global pandemic and securing an inclusive global economic recovery, including by supporting developing countries through debt relief."

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A separate senior administration official said on Friday Biden would stop short of getting directly involved in OPEC decisions about ramping up supply: "We're certainly not going to get involved with the specifics of what happens within the cartel, but we have a voice and we intend to use it on an issue that's affecting the global economy."

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"There are major energy producers that have spare capacity," the official said. "And we're encouraging them to use it to ensure a stronger, more sustainable recovery across the world."

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Energy policy was top of mind for the President in a meeting with German Chancellor Angela Merkel and Vice-Chancellor Olaf Scholz, Merkel's likely successor. Per a senior administration official, Biden "made the point that we need to see adequate supply of energy in this moment as we make the long term transition to a carbon free economy" during the sideline meeting.

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The President is expected to hold additional bilateral meetings with world leaders while in Rome, though the White House has yet to make any firm announcements.

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G20 leaders to endorse Biden proposal for global minimum corporate tax

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Leaders of the world’s 20 biggest economies will endorse a US proposal for a global minimum corporate tax of 15%, draft conclusions of the two-day G20 summit in Rome showed on Saturday.

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The G20 plans to have the rules in force in 2023.

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“This is more than just a tax deal, it’s a reshaping of the rules of the global economy,” a senior US official told reporters.

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The agreement, drawn from proposals drawn up by the Organisation for Economic Co-operation and Development (OECD), is designed to safeguard tax revenues and offer stability to businesses that operate across national borders.

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“The fact that we agreed on this new international tax system is good news for all of us, it’s clearly a revolution in the international tax system,” said the French finance minister, Bruno Le Maire, on Friday as officials arrived in Rome.

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The Biden administration had sought a 21% corporate tax rate floor but a 15% rate still represents a win for the US heading into next week’s COP26 climate conference in Glasgow. Biden’s domestic plans to cut carbon emissions are mired in Washington gridlock.

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The tax pact is expected to be formally announced on Sunday.

It sets a minimum rate of 15% on the profits of large businesses, which will raise additional revenue for most governments and shift the tax burden to where companies sell to consumers, not where they are based. International corporations will have less scope to deploy tax avoidance schemes.

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Some nations are expected to benefit more than others. According to Wall Street Journal, for the US additional revenues from a minimum corporate tax will be 15 times those of China. A separate report cited by the Journal estimates that the total boost to 52 developing countries could be about $1.5bn to $2bn a year, far less than wealthier nations.

Earlier this month, Biden described the proposals as “unprecedented”.

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The “race to the bottom” on corporate tax rates, he said, “hasn’t just harmed American workers, it’s put many of our allies at a competitive disadvantage as well”.

A deal, Biden said, would “eliminate incentives to shift jobs and profits abroad, and ensure that multinational corporations pay their fair share here at home. This international agreement is proof that the rest of the world agrees that corporations can and should do more to ensure that we build back better.”

Pascal Saint-Amans, a senior tax official at the OECD, told the Journal the “pushback against globalisation that we’ve seen everywhere should also have been a pushback against tax multilateralism. But if you want to protect your sovereignty, what you need is tax cooperation.”


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Original link: https://reviewsmovie.substack.com/p/joe-biden-gets-a-win-on-global-taxes

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