BEFIT: One-Stop-Shop or One-More-Stop?
On 12 September, the European Commission released a proposal called “Business in Europe: Framework for Income Taxation” (BEFIT) and two associated proposals on transfer pricing and a Head of Office tax system.
Daniel Bunn is President and CEO of the Tax Foundation. Daniel has been with the organization since 2018 and, prior to becoming President, successfully built its Center for Global Tax Policy, expanding the Tax Foundation’s reach and impact around the world.
Prior to joining the Tax Foundation, Daniel worked in the United States Senate at the Joint Economic Committee as part of Senator Mike Lee’s (R-UT) Social Capital Project and on the policy staff for both Senator Lee and Senator Tim Scott (R-SC). In his time in the Senate, Daniel developed legislative initiatives on tax, trade, regulatory, and budget policy.
He has a master’s degree in Economic Policy from Central European University in Budapest, Hungary, and a bachelor’s degree in Business Administration from North Greenville University in South Carolina.
Daniel lives in Halethorpe, Maryland, with his wife and their three children.
On 12 September, the European Commission released a proposal called “Business in Europe: Framework for Income Taxation” (BEFIT) and two associated proposals on transfer pricing and a Head of Office tax system.
A major case pending before the U.S. Supreme Court (Moore v. United States) is calling into question provisions on large portions of the U.S. tax base which could quickly become legally uncertain, putting significant revenue at stake.
Pillar Two implementation is underway in many jurisdictions, and many governments are aiming to get their proposals approved before the end of 2023. However, estimating Pillar Two’s impact on government revenue is proving difficult. As a result, only a few countries have publicly presented their findings.
The United Nations (UN) is preparing to flex its muscles on international tax policy. Several developing countries say the OECD’s approach favors richer countries at their expense, and the UN hopes to fix this.
Simplifying international tax rules will not solve all the challenges that stand in the way of healthy cross-border investment, but eliminating unnecessary provisions would be a positive pivot relative to the trajectory of recent years. It’s high time that policymakers stopped pursuing ever more complex rules and started the hard work of simplification.
The agreement represents a major change for tax competition, and many countries will be rethinking their tax policies for multinationals in light of it. However, with both the U.S. and EU hitting roadblocks in their respective legislative processes, it is unclear when or even if the agreement will be implemented. If implementation fails, a return to a world of distortive European digital services taxes and retaliatory American tariffs could be on the horizon.
The price tag of the Inflation Reduction Act’s green energy tax credits is much higher than originally thought. Among other things, the updated analysis indicates the Inflation Reduction Act does not reduce deficits after all.
The legislation follows from the bipartisan concern regarding tax policies adopted by other countries specifically targeting U.S. businesses or the U.S. tax base.
Although the U.S. has a progressive tax system and a relatively low tax burden compared to the OECD average, average-wage workers still pay more than 30 percent of their wages in taxes.
Even in the face of a global minimum tax, Congress still has a chance to develop a strategic approach in support of U.S. investment and innovation.
Permanent full expensing is an efficient and neutral tax policy that will allow markets to allocate private investment effectively while moving the economy towards the climate goals of the EU.
Scandinavian countries are well known for their broad social safety net and their public funding of services such as universal health care, higher education, parental leave, and child and elderly care. So how do Scandinavian countries raise their tax revenues?
At a moment when countries are trying to make production more environmentally friendly and shore up supply chain weaknesses, capital investment is critical. Rather than adopt temporary policies that phase out and expire, policymakers should focus their efforts on long-term reforms to support investment.
The UK’s adoption of full expensing is a welcome step that may generate short-run economic benefits. However, for the reform to have a meaningful effect on the UK’s international competitiveness and long-run economic performance, it must be made permanent—which the British government has said it hopes to do.
Sound tax policy should be based on the principles of simplicity, stability, transparency, and neutrality.
Different taxes have different economic effects, so policymakers should always consider how tax revenue is raised and not just how much is raised.
Designing tax policy in a way that sustainably finances government activities while minimizing distortions is important for supporting a productive economy.
The process leading to the global minimum tax has been messy, and the mess will likely continue for years to come. New revenues are hardly a salve for the setback they represent.
As it stands, Pillar One would usher in the end of many digital services taxes (though perhaps not all) at the cost of increased complexity (in an already complex and uncertain system).
the Inflation Reduction Act gives us a glimpse into a future where the U.S. and EU opt for protectionist tax and trade policies rather than implementing principled tax policies and reducing trade barriers between allies.