If you watched either public TV news outlet here in Germany yesterday.....among the top bits of news is this discussion taking place at a G20 Finance Minister meeting in Japan. Germany's Finance Minister.....Olaf Scholz....is at the middle of this meeting, and he's pushing an agenda that other members are buying into....a worldwide minimum tax for companies.
Yes, after years (maybe even decades), this continual bit of companies declaring all their taxes, and then throwing the tax credits into the middle of this....ending up with marginal or zero tax payments....political folks are now furious (well....as much as they can pretend to be).
The idea here is that the G20 countries (the ones with real industrial clout) could put into a minimum tax deal, and force it. The problem? No one is sure about the level required. For example, you (as a company) go and clear 10 billion Euro as 'profit'.....how much do you force upon the company as a minimum (one billion Euro, or three billion Euro, or five billion)? Then the next question, if you have a mega-company doing this, and then have a local guy employing forty employees in Mainz, and he's using tax credits off his 280,000 Euro 'profit' a year.....do you force a minimum on him as ell (say 100,000 Euro has to be paid as a minimum)?
Will this type of minimum tax create a wave of movements (say that the headquarters decides to move over to a non-G20 country like Iceland or Lebanon)? That part of the game is being discussed as well, because they already anticipate that might occur. Will this cause prices to rise, triggering inflation? Some argue it might. If countries like Germany were to get an extra sixty-billion Euro a year via this gimmick.....how would they spend it? And if the 'gifts' to the public escalate, would Germany come back in five years to bump the minimum tax payment to 35-percent of the profit? Then twenty years down the line.....50-percent of the profit?
All of this leads to questions, and I seriously doubt that the G20 will be able to agree on the number that Germany desperately wants. You might see the majority agree to a 4-percent of the profits minimum tax, which really won't fulfill the dream list of the German Finance Minister.
Settle back and be entertained by this political 'game'.
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