It is thus exciting to learn that the Group of 7 has finally decided to jump into the tax harmonization bandwagon to bring the tax holidays to an end. Should all countries in the world embrace a standard tax burden both for individuals as well as for corporations two miraculous events could materialize. Since the move will sensibly increase the cost of creating an institutional framework to make profits travel to low tax destinations, corporations will give up on tax havens. His will increase the tax inflows of most countries in the world except those experiencing political upheavals or producing economic policies aimed at destroying growth ( e.g. Syria, Somalia, Venezuela, Argentina, Indonesia, Myanmar) . Second strengthened public finances can better tackle the challenges of reshaping infrastructure to better serve the 21s century economic demands.
One wonders why this rather simple reform with such extraordinary impact upon the world economy and democratic rule was not tabled before in the Group of 7 Summits. The answer is rather simple. The US Secretaries of the Treasury were men. They seldom deal with house keeping matters. Thus it had to be a woman of the stature and sensitivity of Janet Yellen to pop the tax vacation party bubble once and for all.
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