Will a global corporate tax rate end the practice of shifting profits to low tax jurisdictions?
A survey of European and US economists explores their views on some of the issues surrounding the global deal on corporate taxes: the impact of a global minimum rate on investment, profit-shifting and low-tax jurisdictions; whether a stable international tax system that includes a global minimum rate can be achieved; and a potential move from levying taxes based on where firms’ headquarters and production are located to where they make their sales. Romesh Vaitilingam sums up the results.
Leaders of the advanced economies of the G7 recently made what they described as a ‘historic commitment’ on taxation of multinational corporations. The Initiative on Global Markets Forum asked a panel of experts whether they agreed or disagreed with three statements, and, if so, how strongly and with what degree of confidence. Of the panel’s 48 European experts, 38 participated in this survey; of 43 US experts, 37 participated – for a total of 75 expert reactions.
Statement 1. a) A global minimum corporate tax rate would limit the benefits to companies of shifting profits to low-tax jurisdictions without biasing where they invest.
On the first statement, a strong majority of panellists (94%) agrees that a global minimum corporate tax rate would limit the benefits of profit-shifting to low-tax jurisdictions without biasing where firms invest.
Weighted by each expert’s confidence in their response, 44% of the European panel strongly agree, 50% agree, 4% are uncertain, and 3% disagree (the totals don’t always sum to 100 because of rounding). Among the US panel (again weighted by each expert’s confidence in their response), 13% strongly agree, 82% agree, 5% are uncertain, and 0% disagree.
Overall, across both panels, 31% strongly agree, 63% agree, 4% are uncertain, and 2% disagree.
More nuances in the experts’ views come through in the short comments that they are able to include when they participate in the survey. Among those who agree with the statement, Jan Pieter Krahnen at Goethe University Frankfurt says: ‘This is exactly the argument of the proponents – and I think it is correct as a first order effect.’ Nicholas Bloom at Stanford explains: ‘Profit shifting is a curse for governments that want to properly tax capital. A global minimum tax is the best tool against this.’ His colleague Kenneth Judd adds: ‘Tax competition causes wasteful tax avoidance activities. This minimum also makes it easier for countries to bring down their rates.’
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Πηγή: blogs.lse.ac.uk
