The G7 tax deal is all about American geo-economics

June 16, 2021

The G7 reached a historic agreement for a global corporate tax rate of a minimum of 15% in which corporations must also pay taxes in nations where they sell (and not just where they’re headquartered). If we take the deal at face value, it seems that power is shifting from corporations to states. After all, since the 1980s, the global corporate tax rate had been dropping from 50% to 24%, as developing countries built growth models by attracting foreign investors with lower taxes and some developed countries also took part in the ‘race to the bottom’ (e.g. Ireland, the Netherlands, Singapore). However, behind the deal of the G7, more forces are at play. Although it is a multilateral deal, hailed by many as the return of responsible U.S. leadership, it is primarily the U.S. that will benefit. First, it is expected that the biggest share of taxes will be paid by U.S. big tech companies to the U.S. itself. Second, in exchange for its concessions in the deal, the U.S. has demanded the removal of the Digital Services Taxes of European countries. It shows that American multilateralism is still a ‘geo-economic’ instrument to wield power across the globe.

Burning questions:
  • How will the EU adjust to U.S. demands to drop digital services taxes?
  • Will there be a G20 tax deal in July?

Series 'AI Metaphors'

1. The Tool
Category: Objects
Humans shape tools.

We make them part of our body while we melt their essence with our intentions. They require some finesse to use but they never fool us or trick us. Humans use tools, tools never use humans.

We are the masters determining their course, integrating them gracefully into the minutiae of our everyday lives. Immovable and unyielding, they remain reliant on our guidance, devoid of desire and intent, they remain exactly where we leave them, their functionality unchanging over time.

We retain the ultimate authority, able to discard them at will or, in today's context, simply power them down. Though they may occasionally foster irritation, largely they stand steadfast, loyal allies in our daily toils.

Thus we place our faith in tools, acknowledging that they are mere reflections of our own capabilities. In them, there is no entity to venerate or fault but ourselves, for they are but inert extensions of our own being, inanimate and steadfast, awaiting our command.
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2. The Machine
Category: Objects
Unlike a mere tool, the machine does not need the guidance of our hand, operating autonomously through its intricate network of gears and wheels. It achieves feats of motion that surpass the wildest human imaginations, harboring a power reminiscent of a cavalry of horses. Though it demands maintenance to replace broken parts and fix malfunctions, it mostly acts independently, allowing us to retreat and become mere observers to its diligent performance. We interact with it through buttons and handles, guiding its operations with minor adjustments and feedback as it works tirelessly. Embodying relentless purpose, laboring in a cycle of infinite repetition, the machine is a testament to human ingenuity manifested in metal and motion.
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About the author(s)

At sister company Dasym, Alexander has been assigned a variety of tasks, for his interests transcend branches of knowledge as well as geographical boundaries. In brief, he writes policy papers, interprets and elucidates global developments, and conducts thematic investment research. His academic background spans public administration, history of international relations, and philosophy, having published dissertations on smart cities, Ethiopian sovereignty and independence, and Chinese philosophy towards technology. Integral to his responsibilities, Alexander wades through the latest literature on geopolitics, technology, financial markets and cultural anthropology.

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