In a free market system, sellers compete by offering products of either a higher quality, or at a lower price. However, when sellers collude to sell their products all at a fixed price, consumers pay a higher price because there is no longer a need for competition. In the private sector, this is called a cartel. In the public sector, we call it a G7 summit.
Joe Biden fancies himself something of a straight shooter, so why is he not shooting straight with Americans when it comes to the G7’s latest scheme for a global minimum corporate tax of 15 percent? Try as they might to spin it, the G7’s plan is a global tax cartel, and while this sort of socialism is par for the course for Europe, America should know better.
America is a country whose entrepreneurs built the world’s greatest and strongest economy. We are home to recent success stories like Apple and Amazon, but also benefit from some three million businesses owned by immigrants that generated more than a trillion dollars for the U.S. economy.
Why in the world, then, would we voluntarily agree to make doing business in America and with American companies worse, so that by comparison, it makes doing business in Europe better? It is not the American taxpayers’ job to subsidize European socialism, but that is exactly what Biden is volunteering them to do by pledging U.S. support for this tax cartel.
If European countries want to band together and levy higher taxes on corporations, that is their business. America should be working in the opposite direction, however, by taking steps that make operating a corporation in the United States more appealing. Between its kangaroo courts and mind-boggling fines whenever the European Union decides it is owed money by a corporation, the pitch to move business operations to the U.S. is – or should be – a no-brainer.
Of course, that pitch becomes considerably less believable when America starts adopting the same socialist tax policies that have incentivized companies to flee Europe.
Today’s global companies are more “portable” than ever. Many, like those in Big Tech, have no real manufacturing footprint; others have their manufacturing processes already dispersed around the globe. When corporations decide to pick-up and leave a country, they can do so without the same disruption to their operations that previously would have forced them to just stay put.
Only hubris and detachment from market reality can explain why the G7 thinks companies will only consider investing in a country within the tax cartel, instead of others that recognizes the value of providing economic freedom to do business and make money.
As developing nations today are learning from the ruinous lessons of socialism, the G7 appears to be heading more towards it. It is here that we see the E.U. losing its edge in competing for global business, thus belying the true intent behind the cartel’s action. Europe knows it cannot compete with a global economic landscape favoring economic freedom, and it desperately needs tax revenue to continue funding its progressive agenda, thus the push for a global minimum tax.
Washington should not require a crystal ball to see what future awaits us by jumping on the G7 global tax bandwagon. One has only to consider what is happening to states here at home. New York and California are hemorrhaging both corporations and wealthy citizens. States like Texas and Florida are flourishing as economic “refugees” relocate in pursuit of friendlier business climates and better tax rates. Does Biden think it will be any different on a global scale? Does he not care? Or is this “Europeanization” of corporate tax policy what he actually desires for America?
A global tax cartel forces America to oppose what we do best – engage capitalism.
The Left’s fawning over Europe is nothing new, but as we watch the continent’s slide toward economic decay, unchecked immigration, and ineffective healthcare systems stretched beyond the breaking point by COVID, now is precisely the wrong time to embrace those policies.
However, with Biden at our helm and doing whatever he can to prove he is the “nice cop” taking over from “bad cop” Donald Trump, appeasing his European buddies is more important than working to maintain America’s leadership on the world economic stage.