How world's super-rich are rewriting the rules

Ongoing efforts to derail multilateral tax cooperation lie at the heart of a global programme to replace democratic governance with coercive rule by the extremely wealthy — or what we call 21st-century Caesarism.

- JOSEPH E STIGLITZ JAYATI GHOSH

Any strategy to counter this programme, therefore, must recognise that taxing extreme wealth is essential to saving democracy.

Fortunately, there has been some progress here. The African Union continues to champion the United Nations Framework Convention on International Tax Cooperation; Colombia, Brazil, Spain, and Tunisia have implemented progressive tax reforms; the French public has signalled strong support for a 2% tax on the ultra-wealthy; and a proposed California ballot initiative would enact a onetime 5% tax on billionaires' net worth.

But tax justice remains hotly contested. At the OECD/G20 Inclusive Framework negotiations in early January, more than 145 countries agreed to give big US multinationals a free pass. Having been compromised by power imbalances from the outset, the OECD/G20 process was easy for US President Donald Trump to hijack. Following intensive lobbying by the United States, large American energy, technology, and pharmaceutical firms secured sweeping exemptions from the 15% global minimum tax that had been agreed in 2021 after a decade of painstaking negotiations.

Of course, the OECD/G20 Inclusive Framework could not state its surrender openly. Instead, it suddenly "discovered" that the existing US tax regime is equivalent to Pillar Two of the original agreement, implying that other countries are barred from imposing additional taxes on multinationals headquartered in the US. But the two are not the same: the global minimum tax applies a country-by-country computation to determine the amount, whereas US rules apply to US-based multinationals' total foreign profits. The latter allows companies to offset high taxes paid in some countries against zero taxes paid in others, thus restoring the advantages of zero-tax jurisdictions.