Imposing a minimum global tax on corporations has long been a priority of the United States, which rightly wants to avoid having big American multinationals claiming domicile in some low-tax or no-tax haven, costing the Treasury billions, perhaps trillions. So notch a victory for Treasury Secretary Janet Yellen in getting the G-7 Western economic powers to agree to a 15% floor on taxation for these roving giants. Wherever they are, from New York to London to Frankfurt to Tokyo, they would have to pay.
The minimum tax is one of the two pillars of the plan. The other is levying taxes where companies operate, and not just the address of the CEO. So Facebook and Apple and Google and Amazon and Microsoft, all with their top bosses sitting on the West Coast but doing billions in business all over the world, would need to contribute in those locales. This was a goal of the Europeans aimed at the U.S. tech sector. Still, only firms with a profit margin of 10% or higher would be liable for this, so maybe some of them could duck underneath it.
FOR ALL the elbow bumps or handshakes, seven countries isn’t the whole world. The larger G-20 will take it up next, which critically includes China, a huge trading nation, but often a rogue player, befitting its dictatorial government. Beijing’s undermining norms and cheating in so many other areas, from tariffs to piracy of intellectual property, cannot be tolerated when setting new tax policies.