As the pandemic continues to extract global human losses more businesses die fiscal deaths with significant social consequences.
The World Inequality database recently reported that the global statutory corporate tax rate has fallen by half. The implications are that funding for social and other public good programs has dwindled globally. The policy conclusions follow:
• Cutting corporate tax rates is less likely to generate quick positive effects on wages than textbook economic models suggest. For wages to rise, factors of production that complement labor need to increase. This can happen fast if tangible capital flows from abroad, less so if it ismostly paper profits that move across borders.
• Profit shifting reduces the effective rates paid by multinationals compared to local firms, which could affect competition.
• Profit shifting also reduces the taxes paid by the wealthy, as ownership of these firms is concentrated. This might call for offsetting changes in individual income taxation, or changes in the way multinational companies are taxed
In our previous work, we used similar data to demonstrate income inequity across countries:
Furthermore, the report indicates if the US continues in historic patterns the forecast for 2050 is significantly worse. How then do we take the lessons of history and make a better future? We begin to listen to our humanity, across the globe. We begin to understand that we may have differences but to truly create a sustainable tomorrow we must transform the imbalances of the past and create more and equitable distribution of human existence globally.