Time to fix the way governments tax multinational companies
The answer lies in reducing incentives to shift profits to havens
TAX COMPANIES too much, and growth will shrivel. Tax them too little, and resentment will soar. The public and politicians in Western countries have long thought the treatment of multinationals falls too close to that second extreme. Now the system is reaching breaking-point. Over 40 countries are squabbling over how to impose levies on Silicon Valley firms. Meanwhile the pandemic is forcing governments to find ways to plug their fiscal deficits, not least the Biden administration, which wants to increase multinationals’ tax rate.
This article appeared in the Leaders section of the print edition under the headline “End the contortions”
Leaders May 15th 2021
From the May 15th 2021 edition
Discover stories from this section and more in the list of contents
Explore the editionMore from Leaders
How to respond to the riots on Britain’s streets
The violence demands robust policing, but it also requires cool heads
Is the big state back in Britain?
The risk is not too much interventionism, but too little audacity
How to make tourism work for locals and visitors alike
Holidays don’t have to be hell
Genomic medicines can cost $3m a dose. How to make them affordable
The treatments are marvels of innovation. Their pricing must be inventive, too
Chinese companies are winning the global south
Their expansion abroad holds important lessons for Western incumbents
The Middle East must step back from the brink
That still means starting with a ceasefire in Gaza