Opinion: Biden is close to a big win that would strike at the core of Trumpism
It’s now becoming clear that U.S. policy changes needed to make the global minimum tax a reality will likely be in the big bill that Democrats hope to pass via reconciliation. On Sunday, Treasury Secretary Janet L. Yellen told ABC News she fully expects this to happen.
This comes after more than 130 nations reached a deal Friday to participate in a minimum 15 percent levy on corporations to stop the “race to the bottom” among nations competing for multinational corporations.
All this contains the seeds of a Democratic response to the populist nationalism that Donald Trump reshaped the GOP around. It displays how negotiated multilateral settlements can help mitigate some of the degradations of globalization that right wing nationalism purports to address, albeit with fake solutions.
The central feature of the global minimum tax is an agreement by each nation to “top up” taxes paid by their corporations on overseas profits to 15 percent. This would capture revenue from companies that use numerous clever bookkeeping tricks to stash profits in lower-tax venues.
Right wing nationalists are supposed to hate such elite chicanery. After all, international capital mobility and profit shifting are two key ways that multinationals have emerged as big winners from globalization. This has deprived the nation of revenue, while allowing multinationals access to elite tax avoidance strategies that ordinary Americans lack.
You’d think this would be particularly offensive to those nationalists who preen around declaring that globalist and cosmopolitan elites have presided over the hollowing out of virtuous nonmetropolitan Real America.
Yet, while such nationalists do sometimes decry this problem, there isn’t a real nationalist solution to it. The answer is a multilateral one.
No ‘nationalist’ solution
The reason a global minimum tax addresses this problem is that, with nations topping up corporate taxes to 15 percent, the incentives for them to shift profits are lessened.
To be fair, the 2017 Trump tax cut did try to do more to unilaterally tax some profits abroad. But for hyper-technical reasons it appears to have failed to discourage such profit-shifting. Multilateral cooperation is more likely to succeed, and offers a solution truly in keeping with what has become a dire global problem.
“No one country can solve this problem on its own,” Seth Hanlon, a senior fellow at the Center for American Progress, tells me, adding that at its core, this is a “collective action problem.”
While the United States could do more on its own to tax profits that U.S. multinationals shift, Hanlon notes, they would still have strong incentives to find ways around such efforts. A global minimum tax would do more to close off such possibilities.
“This is a multilateral solution that essentially says, ‘tax havens aren’t going to exist anymore,’” Hanlon told me. “Having a multilateral solution is a much stronger way of preventing tax haven abuse.”
The Biden administration estimates that the global minimum tax could recapture hundreds of billions of dollars over the next decade. But precisely because it’s multilateral, right wing nationalists will likely oppose it.
The hollowness of right wing nationalism
The standard right wing nationalist objection to such multilateral arrangements is they deprive U.S. citizens of agency by turning over decision-making to globalist elites. But in this case, multilateral cooperation could prevent corporations from exploiting global mobility in ways that limit what nations can do democratically, in keeping with their own citizens’ aspirations.
“When corporations move their profits around, countries are constrained in their national policies,” Hanlon told me. “What that does is shift the burden of taxes off global corporations and on to other revenue sources, including workers.” Paradoxically, here multilateralism becomes a way to help restore national democratic agency.
All this suggests a deeper possibility. At a time when the U.S. withdrawal from Afghanistan has raised new questions about our global posture, this sort of multilateral cooperation could point toward a rehabilitated liberal internationalism as the way forward.
Underscoring this notion, experts say that if the climate change provisions in the reconciliation and bipartisan infrastructure bills pass, they would easily constitute the most ambitious action Congress has ever taken to address global warming.
If this happens, it will enable Biden to exercise global leadership at this fall’s global climate conference in Glasgow. A rehabilitated liberal internationalism offers better hope of mitigating our current trajectory toward catastrophe than right wing nationalism does.
The bigger point here is that in practice, right wing nationalism often tends toward a virulently reactionary cultural politics that commands the conservative information ecosystem while taking precedence over actual problem solving. In the face of these global challenges, what does right wing nationalism really have to offer?
There is a long way to go, of course, until Biden’s agenda becomes law, and it could all still collapse. But if nothing else, all this again underscores the enormity of the stakes in getting it done.
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