MESSAGE
| DATE | 2021-05-06 |
| FROM | shulie
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| SUBJECT | Re: [Hangout - NYLXS] National Control and Political Freedom in the
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*Infections have climbed in recent weeks, but locked-down Paris has
suffered too. And voters made clear that higher Covid-19 risk was
preferable to destroying Madrid’s economy. Earlier this year, its bars
and restaurants provided more jobs than Andalusia and Catalonia for the
first time, according to an industry group. Expect the capital region to
outgrow the rest of Spain this year.*
On 5/6/21 2:41 PM, Ruben Safir wrote:
> wsj.com
> Opinion | The Corporate Tax and American Sovereignty
> Thomas J. Duesterberg
> 7-9 minutes
>
> Treasury Secretary Janet Yellen has a grand idea: a global tax regime.
> She envisions a minimum corporate tax standardized across the developed
> world and expanded authority for nations to tax multinational
> corporations. Together with the Biden administration’s plan to raise the
> U.S. corporate tax rate to 28% and eliminate preferences, it would
> return the U.S. to its pre-2017 status as a high-tax jurisdiction,
> discouraging domestic capital investment and production. More insidious,
> it would cede authority over taxation, one of the pillars of democratic
> governance, to some ill-defined international technocratic body or group
> of experts.
>
> Such erosion of sovereign democratic oversight should be recognizable.
> It has long characterized Europe and is part and parcel of the European
> Union’s ambition to become a global regulatory superpower.
>
> Ms. Yellen’s proposal arises out of the longstanding efforts of major
> European nations to extend their taxing power over U.S. technology firms
> through so-called digital taxes. Initiatives from France, Austria, Italy
> and the U.K. threatened to undermine efforts to harmonize corporate
> taxation in the EU and open a new front in a trade war with the U.S.
> Given the need for unanimous approval for EU laws and opposition from
> Ireland and some Northern European member states, European leaders
> shifted the debate to the Organization for Economic Cooperation and
> Development, or OECD, a group of 37 high-income countries including the U.S.
>
> The initiative expanded quickly to include a minimum corporate tax,
> another long-term EU goal that couldn’t be achieved internally or be
> effective unless other developed countries participated. In this way,
> European leaders sought to reduce tax competition among EU member states
> as well as low-tax nations such as the U.S., Switzerland, Singapore and
> Bermuda. Since Europe and most other developed countries rely more
> heavily on value-added taxes than corporate taxes, raising the latter
> would give their firms a cost advantage over U.S. firms, especially
> since most of the VATs are refundable for exported products. U.S.
> attempts over the years to match such an export advantage have been
> stymied by rulings of the World Trade Organization.
>
> The new Biden team is eager to work with Europe on larger questions such
> as the China challenge, climate change and reform of the World Trade
> Organization. Entering a negotiation on corporate taxes, the thinking
> goes, could help secure European cooperation while incidentally
> providing domestic political cover for the tax hikes the Biden
> administration needs to fund new spending.
>
> If an agreement is reached through the OECD, the administration is
> likely to enact it as a “multilateral instrument,” somewhat akin to the
> Paris Climate Accord, and avoid submitting it to the Senate as a tax
> treaty. A precedent can even be found for this in the OECD’s 2016
> Multilateral Convention to Implement Tax Treaty Related Measures to
> Prevent Base Erosion and Profit Shifting.
>
> This approach would transfer significant national sovereignty over
> corporate taxation, key to overall economic policy, to some
> yet-to-be-defined international regime under the guidance of the OECD,
> an unelected multilateral institution. The EU since its inception has
> embraced such transfers of power to avoid the difficulties of achieving
> consensus through popular political participation. The WTO, too, has
> evolved in the direction of settling disputes and interpreting
> agreements through elite consensus and rule by technical experts, which
> is one reason the U.S. has been so critical of its operations.
>
> We need to know how far this transfer of authority would extend and what
> institution or process would handle disputes and enforcement. Would the
> negotiated rules be incorporated automatically into the tax laws of
> signatories, much like EU rules have immediate force of law in member
> states? If Arizona wants to give tax abatements to a domestic or foreign
> semiconductor firm to build a fabrication plant, would it have to get
> the approval of OECD experts? Would other nations have a way of
> challenging such tax incentives?
>
> The institutions of European integration offer a cautionary note. The EU
> now has a Parliament that can’t initiate legislation; a governing
> council of national leaders constrained by the modern equivalent of
> liberum veto, the unanimity principle; a central bank that pays little
> attention to foundational treaties in imposing fiscal policy changes in
> nations such as Greece and Italy and in expanding EU debt issuance; a
> Court of Justice that operates in secret and issues transformational
> rulings divining the “teleological” spirit of founding documents; and an
> unelected bureaucracy in the European Commission that proposes
> legislation, regulates and distributes funding. These institutions all
> suffer from a democratic deficit and a technocratic dominance
> antithetical to the Madisonian concept of government.
>
> The WTO has some of the same problems, though not to the same extent.
> The U.S. critique of the trade group is based largely on that
> institution’s tendency to reinterpret its foundational agreements and
> its failure, due to the unanimity principle, to discipline rule-breakers
> like mercantilist China or address new areas like digital commerce.
>
> The Biden team should understand the road it is heading down. Its
> Covid-relief law and infrastructure bill also ride roughshod over the
> federalist system that has nurtured democratic traditions in this
> country. Both exploit central government purchasing, spending and
> regulatory power to overturn decades of local decisions and state
> control over everything from housing and infrastructure permitting to
> labor laws. Ceding corporate-taxation authority to an undefined
> international authority that will inevitably be controlled by an
> unelected technocratic elite would erode Madisonian principles even
> further. It would move America closer to the EU model of governance.
>
> Mr. Duesterberg is a senior fellow at the Hudson Institute. He served as
> assistant secretary of commerce for international economic policy, 1989-93.
>
> WSJ Opinion: Joe Biden, ‘Union Guy’
> Your browser does not support HTML5 video.
>
> 0:00 / 3:54
>
> 3:20
>
> WSJ Opinion: Joe Biden, ‘Union Guy’
>
> WSJ Opinion: Joe Biden, ‘Union Guy’
> Main Street: The president’s labor agenda is the same one he brought to
> Washington in 1973. Images: Getty Images/AP Video Composite: Mark Kelly
>
>
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