Is the economy making governments worried that they need ways to catch more revenue, or are they just being governments?
When I posted about how the U.S. government is greedy to shake down corporations for more revenue, I didn’t know that there was an international effort to sweep up more revenue across borders. Now I wonder if the story I wrote about had its ultimate origins in some government public relations office to soften up the public. The rule seems to be that we should always feel suspicious of private corporations, but always feel sorry for giant public corporations that are trying to take more revenue from any source they can find.
Associated Press published a short news piece: “Finance officials clamp down on multinational tax evasion.”
Finance officials from the world’s 20 biggest countries are committing to tougher laws to prevent multinational companies from avoiding as much as $250 billion a year in taxes.
The unanimous agreement was announced Friday in Peru’s capital on the sidelines of the annual meeting of the International Monetary Fund. The plan will be presented for approval by heads of state from the Group of 20 nations at a summit next month in Turkey.
Officials at a press conference said the plan will address concerns about whether companies such as Apple and Google are paying their fair amount in taxes.
The concern that has made the governments get together is what they call “tax-shopping.” Up till now, companies with an international presence could locate some part of themselves in countries with lower tax-rates. There is, of course, nothing wrong with this practice. Trying to make it illegal is like making it illegal to relocate from California to Texas because the government doesn’t rip off residents as badly in Texas—something that is happening at a rising rate.
These governments of these countries are trying to form a net of treaties that will obstruct corporations from reducing their tax liability. But it is no more right or moral to do this than it is to try to make it illegal for Americans to move from a high-tax state to a state without income tax.
If these nations succeed in effectively raising the amount these corporations pay in taxes, consumers will begin to feel it in higher prices and lower quality—a government “benefit.”