Tax Compliance and Pressure

This time, pressure on another nation to comply with a global minimum tax regime. The Biden administration is unhappy with Hungary for standing in the way of the EU’s agreeing a global (or at least Western World) regime that would contain a minimum tax level. That minimum level was designed to eliminate tax rate competition among nations.

On Friday the Treasury said the US is withdrawing from a 1979 bilateral tax treaty with Hungary.

Eliminating that nearly 45 year agreement actually is a boon to Hungary, though, rather than pressure, since Yellen and the Biden administration have withdrawn a tool for pressuring that nation.

Never mind that pressuring Hungary on minimum tax compliance is economically idiotic—the race to the bottom of tax rates is a race all nations should be striving to win. Or at least those nations that believe their own citizens aren’t drooling imbeciles and actually can make their own decisions concerning what to do with the money lower tax rates would leave in their hands rather than being forced to give their money into the hands of remote bureau- and technocrats.

Leave a Reply

Your email address will not be published. Required fields are marked *