Influential opponents in the Senate – US opposition threatens global minimum tax failure

The United States needs Ireland. This is because only if all EU member states – as well as tax haven Ireland – agree, can the EU join the most ambitious global tax reform of decades.

But that is precisely a major obstacle. The balance of power in the US Congress is so tight that Biden faces a tough group of Republican nemesis, despite the support of more than 130 countries.

The US Congress decides

You can delay the discussion of the deal until next year with the unreasonable hope of dominating Congress with a double majority after the midterm elections in the fall of 2022. This leads to a stalemate: Congress, under the leadership of the European Union, is closely monitoring whether the world approves a minimum corporate tax of 15 percent and the equitable distribution of tax revenue.

Conversely, Congress may closely monitor how quickly tax islands such as Ireland raise their tax rates and instead repeal unilateral taxes on US technology companies such as Amazon or Apple. Chip Carter, the Trump administration’s chief tax negotiator, says this puts great pressure on the United States to win. “The rest of the world is well aware that the Fiden government cannot force Congress (to make a tax deal).”

“If other countries do not get the tax negotiated negotiated, they will soon lose their appetite for this agreement.”

Robert Strock, Obama executive tax negotiator

Robert Stroke, a tax negotiator for the Obama administration, also expressed doubts in the Wall Street Journal: “The role of Congress is decisive. If other countries do not get the tax negotiated negotiated, they will soon lose their appetite for this agreement. ”

Pay taxes where turnover is generated

In doing so, Biden should try to break the dual opposition of Republicans and the country’s leading business associations. According to them, the tax agreement is a competitive evil: this agreement weakens the position of American companies abroad and increases inflation; This week Yellen foolishly dismissed it.

The first part of the agreement aims to prevent multinational corporations from evading their tax obligations in their own country by transferring profits to lower tax countries. In the future, profits should be taxed wherever companies sell. Due to their global presence, pharmaceutical and technical groups are particularly vulnerable. For example, Ireland has become the tax haven for 24 of the 25 largest pharmaceutical companies. Amazon, Google, Apple and other technology companies are also evading US taxes through clever financial maneuvers.