The other day, I renewed some of my bookmarks and articles I consider writing about, and came across one from a few months ago, on the Minimum Global Corporation Tax that OECD countries negotiated and approved with great bells and whistles a year or two ago.
To recapitulate, the agreement signed by many countries, including the US, has 2 pillars: 1) to reallocate some of the revenues from the Tech companies in countries where the business is being done, as opposed to optimization into a low tax country; 2) Institute a minimum global 15% tax rate on global corporations. And the media and press celebrated the landmark agreement in the name of fairness and just equity.
However, once Davos 2022 came around in January, the statements changed in nature, and the word became that 2023 is too early to implement and 2024 will be the earliest, because countries have to get the obstacles resolved. We also had David Rubenstein, the co-chairman of Carlyle Group, one of the biggest investment firms in the world (I wonder how many tax havens they have setup in), doubting that it would ever go through. In January of this year, his point was that if the US House of Representatives falls to Republicans, the deal will be dead, and even if it does not, it is still likely to be dead. And guess what! The House will be under Republican control starting in January.
If I just look at the past 3 years, I notice the 3 following sets of events:
- The West, in particular the US, were putting the spot light on the Pharmaceutical companies and their drug pricing. Then came COVID and the same countries begged them and rewarded them with billions of dollars, and all that oversight went out the door;
- The world got behind environmental issues and fossil fuel pollution, with more and more mass demonstrations, and Cop26. Then came the Russia-Ukraine war, the sanctions on Russia, and now everyone is begging the military-industrial and the fossil fuel organization for supplies. So the environment went out the door as well;
- And now the armadillo speed of minimum global corporate tax rate has joined the exile, and possibly cancellation, as well.
So now I wonder, where is (and what is) this rules-based international order, so dear to us? Why did it not work on the above issues? Or did it work beautifully, because we managed to bury the issues under a set of rules and order to follow into the infinity and beyond!!
Paris, November 25, 2022,
Zeejay