Stop This Race to the Bottom on Corporate Tax

With the entry of China and Indian into global markets and greater international opportunities for corporations, the impact of globalization has forced down wages around the world and concentrated wealth in the hands of the rich, suggests Columbia University professor Jeffrey Sachs in an essay for Financial Times. At the same time, the US, the UK and other developed economies are facing gaping budget deficits, which they try to close by cutting services for the most vulnerable in society. Sachs points to the problem: Operating a modern, high-technology economy without an adequate tax base is impossible; to close budget holes, corporate tax rates should be increased. But he concedes hikes are unlikely as governments compete for corporate investments by reducing their tax rates. Sachs calls for a summit of leading finance ministers to broker agreements on tax goals and coordinating policy. Globalization has created unprecedented wealth for corporations and unprecedented stress for governments. – YaleGlobal