Global minimum corporate tax: 130 nations to support U.S. proposal
Apparently it&#x27;s also possible to address the issue of shifting corporate profits to tax-havens even without a large scale international agreement.<p>Basically, corporations have one place money comes in and two places it comes out, like so:<p>sales = expenses + profits<p>If you tax the sales, then deduct the expenses, that leaves the <i>incidence</i> of the tax on the profits.  But importantly, unlike profits, it&#x27;s usually clear to which country a sale belongs to.<p>Where this gets complicated is international borders, the solution there is to only deduct domestic expenses.  At first this seems protectionist, but according to economists changes to the currency exchange rates eventually balance out the effect and it ends up trade neutral.<p>This idea was actually seriously proposed as part of US tax reform a few years ago (and I saw some praise from both left&#x2F;right leaning economists), but it got killed because some big companies were against it.  It&#x27;s called a border adjustment tax. [1]<p>Even though the above is an interesting idea this recent attempt to come to an international agreement is probably also reasonable, since it should accomplish some of the same things and getting countries to agree to a headline number is probably more realistically achievable than in-depth reform (so it&#x27;s likely solutions like this or nothing at least in the medium term).<p>[1] <a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Border-adjustment_tax" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Border-adjustment_tax</a>