By Kalawin @Adobe Stock
Adam N. Michel at the Cato Institute reports that the Organization for Economic Cooperation and Development (OECD) puts American companies squarely in the crosshairs with its new global tax scheme. Michel writes:
In a landmark move, nearly 140 countries, including the Biden administration, have rallied behind a new global tax system spearheaded by the Organisation for Economic Co‐operation and Development (OECD). This initiative is aimed at increasing taxes on international businesses and puts American companies squarely in the crosshairs.
As countries around the world begin to implement the OECD system and Congress considers the US role, my latest Cato Policy Analysis provides an overview of the international tax system and how we got here. I present data on profit‐shifting trends and propose forward‐looking reforms.
You can read the full report here. What follows is a brief summary.
A Decision of Global Magnitude
In 2025, the United States Congress will face a decision that could redefine the contours of international taxation, tax competition, and global economic growth. The choice is stark: conform to the OECD’s proposed tax increases or break free from what is an aspiring international tax cartel.
The OECD’s proposal aims to disproportionately burden US firms with tax increases using a Two‐Pillar framework. Pillar One aims to change where some companies pay taxes, selectively moving toward a system based on customer location instead of business activities. Pillar Two includes a series of new rules that enforce a global minimum tax of 15 percent.[…]
These reforms would directly support American workers and investment by making the US a preferred destination for new jobs, factories, intellectual property, and easy‐to‐move profits. They would undermine the OECD global tax project by opting out of its scheme, lowering the risk that the destructive tax hikes will move forward as currently conceived.
Read more here.
