(Global Tax Deal, in Bed with Mrs Market, Part 7)
by A. Irmanputra Sidin, PhD in Constitutional Law/ Constitutional Lawyer
Jakarta, February 9, 2025
So that is why in pros opinion about human creativity would create welfare and the government only play a role to encourage people, will easy understand the views that no need tax collect and impose higher over the individuals and businesses, because would be better for the businesses because It is could generated optimum earnings before tax, and Its could expand their businesses and for individuals could create new business or investing in other businesses and then opportunity to the human being be involved in creativity and innovation open wider at least as a workers.
So if human being are mostly involved because opportunity of the job fields, it means that, to pursue human being welfare depend on the human being itself, not only relies on government benevolences by levy higher taxes, from the people who diligent developed their creativity thought to ignite the market. Peter Lynch said even if the workers get out from the jobs, with their experienced along that times, they could open again a new businesses and need again new workers to grow that new businesses. The market would growing up.[1]
This views rooted from Adam Smith said that there is “the law of the accumulation” which is changing personal interest to the better life for all people. When the owners of the businesses become wore wealthy, automatically they would expand their business and open job field for more people. This is automatically would make more people more wealthy and some of them would resigned and open their own businesses and automatically absorbed people as a workers. The law of accumulation refers to the accumulation of profits and put back into the production. By accumulating profits, earning, the business can purchase additional machinery, factories, software and other elements which support to increase its revenue, which will stimulate further division and specialization of labor, thereby boosting productivity.[2] George W. Bush former US President said “..To create economic growth and opportunity, we must put money back into the hands of the people who buy goods and create jobs” [3]
But It does not mean that the countries no need taxes, but it no need to be higher and should not depend on higher income taxes, because incomes of the state actually will be functioned to spend for state organizations, or could utilization to build infrastructure that many businesses are not interested to involve, as well as emergency budget reserves in global economy volatile.
So that is why Trump and prior administration has different views, Trump believes that businesses especially national businesses would be play a significant role to produce welfare, why they want to impose lower taxes to their businesses and as a substitution to enacted higher tariffs on goods imported from foreign countries to protect their national interests.
Lower corporate income tax rates encourage investment, increase productivity, expand job opportunities, and attract internationally mobile corporate profits. In many cases, cutting the corporate tax rate does not reduce revenue; it may increase it. When Ireland cut its corporate tax, revenue increased. Its corporate tax rate went from 40 percent in 1994 to 12.5 percent by 2003. Since 1993, Irish corporate tax revenue as a share of the economy has increased by 75 percent (2.1 percentage points).[4]
The more businesses could recapture their earning, the more It will expand their business, the more would create pathway to the people involved, at least as a worker. The people as the workers could create their welfare with their own ways, learning from experiences, no need depends on the compassion of political power of the state. Someday, they will resign as a workers and open their own business and “the law of the accumulation” will works.
So that is why Trump also pulls US out from the Global Tax Deal from OECD, it means that all the titan tech, deserve to relief and could expedite all their businesses plan to expand or reinvest toward its businesses interest. The OECD countries could not impose Corporate Income Tax from its earning businesses as a corporation, because its physical offices not presence in that countries. But the countries still might collect tax from the goods and services that the businesses served such as Value Added Tax (VAT) or Goods and Services Tax (GST) but the taxes actually paid by the customers, not cut from the earning of the corporations.
Meta (Instagram, Facebook, Whats Up), Tik Tok, X, Netflix in many countries across the world has no obligation to pay Corporate Income Tax from its earning. Net profit after tax automatically grown more than if they should pay Corporate Income Tax to the foreign countries that they has been operated and hold significant market even without presence according Global Tax Agreement . That is why, the titan tech as a Mrs Market should hug and “kiss the ring” to Mr President.
Mr President fulfill his commitment, not only, to protect American businesses and workers, but the earning of the businesses could be recaptured, because the global tax deal that they should pay, could not collect by participants countries in the Global Tax Deal scheme. Mr President believes that memorandum for pull US out of Global Tax Deal is important presidential actions for pursue of welfare and happiness for people according to constitutional principles.
*Featured Photo, Source : https://global.luskin.ucla.edu/*
[1]Peter Lynch, Learn to Earn, A Beginners Guide To The Basics of Investing and Business,1996, Publisher :Simon and Schuster
[2] ibid
[3] George W Bush, Address of the President to the Joint Session of Congress The United States CongressWashington, D.C. https://georgewbush-whitehouse.archives.gov/news/releases/2001/02/20010228.html
[4] Adam N. Michel and Joshua Loucks, Case for Trump’s 15 Percent Corporate Tax Rate. JANUARY 8, 2025 https://www.cato.org/blog/case-trumps-15-percent-corporate-tax-rate