This is the Cato Daily Podcast for Tuesday, February 13th,

2024. I'm Caleb Brown. European leaders and other OECD

countries want to launch an international tax cartel.

The Biden administration's Treasury Department has been playing along so far, but as Cato's

Adam Michelle points out in a new paper, the U.S. should not go along with it, and Congress ought to instead

double down on low tax rates to make the US a relative tax haven. Where are the

world's tax havens? Like where do companies like to be when it comes time for the tax man to show up?

The world's tax havens are places with no or very low corporate tax rates. Places like the Cayman Islands

is one that's often pointed to but also places like Ireland that has a 12.5% corporate tax rate that is lower than any

other place in Europe and lower than most other countries. And so relatively

speaking businesses like to do more business in these locations.

The OECD doesn't seem to like the fact that tax havens exist. That's correct. The OECD, the sort of collection of higher income largely

European countries, they don't like the idea that a company can choose to do location in an area that has a more

friendly tax regime.

They see this as a threat to their ability to raise the revenue necessary to support the state that they want to have.

But what's interesting is this is actually not the case.

When we look at over the last 40 or so years, corporate income tax rates have fallen.

They fall in by almost half over that period of time from about 50% in the 80s to

mid 20% now, but tax revenue has actually, from the corporate income tax, has actually

increased over that same time. So we've seen the opposite. We've seen corporate tax revenues increase while rates fell.

All right, so the OECD wants to tax global businesses.

So describe how businesses function as global entities.

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