Juggling Dynamite

Danielle was a guest with Jim Goddard on Talk Digital Network talking about recent developments in the world economy and markets.  You can listen to an audio clip of the segment here.

Large corps have long-lobbied for preferential tax treatment and government subsidies because they are ‘job creators.’  In reality, automation and off-shoring have been reducing their employment rolls steadily.  As globalization has allowed multi-nationals to position head offices in the lowest tax zones, countries, states, and provinces have raced each other to the death for the most corporate-friendly offerings.

In one 2018 EU study, it was found that global tech companies were paying average tax rates of less than 10%, compared with 23% for more traditional firms.  Meanwhile, two-thirds of North American jobs are at small and medium-size businesses with fewer than 100 employees.

In North America, the general corporate tax rate was halved over the last 40 years from 50% in 1982 to 26% in 2020, with similar trends evident in all OECD countries except Chile.  Government deficits and debts have ballooned in the process, and none of this is sustainable.

All corporations benefit from taxpayer-funded infrastructure and social benefits that support the workforce and customers where they do business.  They can afford to contribute fairly, and they must.

New proposals have global corporations taxed according to where their customers and employees live and not where they have proclaimed their head office.  This is more equitable.  See Global companies are caught between new taxes and a trade war.

The podcast below also discusses the advent of a new digital tax for the 21st century.

The world is trying to figure out a tax system fit for the 21st century. But the debate over a digital tax has caused political clashes between Europe and the United States.

Komal Sri-Kumar, president and founder of Sri-Kumar Global Strategies, says the Covid-19 pandemic, the lack of another federal stimulus package and the U.S. presidential election are creating a trifecta of negative forces for markets. Here is a direct video link.