Joe Biden: Kudlow says tax hike would ‘extinguish healthy jobs’
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Under Mr Biden’s plans for a global minimum corporation tax rate, countries would also be given taxation rights over profits made by US tech giants. Coupled with Mr Biden’s low rate corporation tax, it is thought the UK could see up to a 21 percent rise in profit to the exchequer. According to analysis from Tax Justice UK, this could benefit the UK to the sum of approximately £13.5billion a year, or if scaled to 15 percent, £8.2billion.
Due to the plans, companies such as Google, Amazon, Facebook and Apple would not be able to move profits from where sales are booked to tax havens.
Indeed, EU states as Ireland and the Netherlands would lose profits as the money is moved from the UK to low tax jurisdictions which would be taxed at the new minimum rate.
This would mean the difference between tax haven rates and the minimum global rate of 21 prevent would then be paid to the UK.
Robert Palmer, executive director of Tax Justice UK, told The Times: “A new minimum corporate tax rate would bring in billions of pounds to support public services and would deal a blow to tax dodging.”
The move by the US Treasury comes after Rishi Sunak announced a decision to raise corporation tax from 19 percent to 25 from 2023.
A UK Government spokesman said: “Updating the international tax rules to ensure that digital businesses pay more tax in the UK, in line with their economic activities, remains a UK priority, and we will work openly and constructively with international partners to develop a consensus-based solution.”
Also announced within the Budget, Mr Sunak stated companies with profits of £50,000 or less would remain at the current rate of 19 percent.
Due to the rise in the tax rate, the Treasury said it will raise an additional £47.8billion by April 2026.
JUST IN: Joe Biden’s global corporation tax plan could cripple Ireland
Both Mr Sunak and the US president hope the raise in cooperation tax may help to fund the economic recovery post-covid.
Commenting on the increase in cooperation tax, Tory MP for Wokingham, Sir John Redwood said the rise in rates may impact investment flows.
Sir John said: “Joe Biden’s proposal for a minimum world corporation tax rate of 21 percent would mean a near doubling of the Irish rate of 12.5 percent.
“I assume the EU supports this as a way to a more level playing field.
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“Could have quite an impact on investment flows.”
Mr Biden has launched a $2.25trillion (£1.6trillion) recovery plan which will look to kickstart projects in energy, railways and moving away from fossil fuels.
Although Republicans have stated they will not back tax hikes, Mr Biden has urged the opposition party to show the US can put forward a suitable long-term plan to combat China’s dominance.
Mr Biden said: “It is not a plan that tinkers around the edges.
“It is a once-in-a-generation investment in America.
“Unlike anything we have seen or done since we built the interstate highway system and the Space Race decades ago.
“It is the largest American jobs investment since World War Two to put us in a position to win the global competition with China.
“If we act now people are going to look back in 50 years and say this was the moment we won the future.”
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