Inflation is surging for Americans – a recent report said it was exploding by 11% at the wholesale level – as well as consumers around the globe.
Food shortages are being predicted.
Then there’s Russia’s war on Ukraine, and multiple other factors that are disrupting the global economy.
But Joe Biden’s treasury chief, Janet Yellen, is heading out on a trip to Warsaw, Brussels and Bonn to lobby for a “global minimum tax.”
The New York Times said Yellen’s big chore during her first stop, in Poland, was to “get the global tax deal that she brokered last year back on track.”
She’s been working on it for some time already.
The report said she got more than 130 countries to agree last year to her plan for a 15% “global minimum” that purportedly would eliminate “tax havens” and have companies pay taxes based on where their customers are, not where their headquarters are.
But there are headwinds to the strategy, including that the European Union has put off a schedule for addressing the concern, and Poland vetoed a plan that was needed.
“Despite initially signing on to the deal, Poland has voiced reservations, including whether the minimum tax will actually prevent big tech companies from seeking out lower-tax jurisdictions. Polish officials have also expressed concern that the two parts of the tax agreement are moving ahead at different paces, as well as trepidation about the impact that raising its tax rate will have on its economy at a time when the country is absorbing waves of Ukrainian refugees,” the report explained.
Yellen, after meeting with Polish Prime Minister Mateusz Morawiecki and Magdalena Rzeczkowska, the nation’s finance minister, said she told them that the tax deal is in Poland’s interests.
She admits there are “technical” issues of concern but said she’s hoping that Poland will “come on board.”
She’s been focused on her new taxation plan since becoming Biden’s pick for the Treasury cabinet post and she believes Poland’s support is necessary over the EU’s consensus requirement for tax changes.
The Times reported Manal Corwin, who was in Treasury during the Barack Obama administration and now has a tax practice, said it was unclear if the tax plan eventually will move forward.
Poland’s concern has been that “big multinational companies wouldn’t still be able to take advantage of low-tax jurisdictions if the two parts of the agreement did not move ahead in tandem, undercutting the global effort to avoid a race to the bottom when it comes to corporate taxation.”
The report also pointed out Poland has little incentive to accommodate the EU demands, as that organization “had refused to disburse billions in aid to Poland since late last year, citing separate concerns over Warsaw’s interference with the independence of its judicial system.”
In response, Poland suggested it could simply veto had EU plan that does require unanimity.
Unresolved are what income would be taxed, and who would enforce it.
The report noted multiple nations still have concerns about the plan and its implementation, and even pointed out that “it remains unclear whether the United States will be able to pass its own legislation to come into compliance.”
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