We won't have a truly global economy until people start taxing it that way
Major talks between the United States and the European Union to establish a shared tax framework for multinational companies broke down on the issue of seeking to secure an agreement on digital taxation. Big tech, which is heavily a U.S. creation, has long been in the sights of European economies, as their profits and revenues have soared and they have increasingly become major components of the 21st-century economy.
Taxation is one of those areas that exposes the contradictions at the heart of globalization. Globalization of goods has proceeded quickly, as has the harmonization of industrial standards across countries.
Harmonization of taxation? Not so easy.
The power to tax is the ultimate national prerogative, one that very few sovereign nations would ever seriously contemplate surrendering to a multinational global entity, even in limited degrees, as has been done in trade (e.g., the World Trade Organization), or global security (e.g., the United Nations). It therefore seems ironic that the Trump administration, largely driven by an economic nationalist agenda, would contemplate, even on an interim basis, changes to global taxation law that would affect leading U.S. big tech companies.
Yet in spite of Trump's America First rhetoric, he did authorize Treasury Secretary Steven Mnuchin to attempt to get the EU and the U.S. on the same page on a global digital tax framework, in part as a means of curbing the practice of global tax arbitrage. It would make sense for all concerned to agree on a framework that provides some degree ...
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