Last year, Australia signed up to the OECD-led push for a global minimum corporate tax rate of 15%, a measure designed to reduce the profit-shifting to low-tax countries which occurs and disadvantages higher corporate tax rate countries such as Australia, which has a 30% rate (see Josh Frydenberg’s media release G20 endorses global minimum tax rate for details). As a former Treasury man, conscious that we need to pay for an ever-expanding welfare state, my initial impression was the agreement is in Australia’s national interest. As always, I strive to be radically open minded, so I invited arguably the world’s leading opponent of the global minimum tax agreement, renowned US libertarian economist and public finance expert Dr Dan Mitchell, onto my Economics Explored podcast to discuss the deal. Dan calls it a “global tax cartel” which will result in greater tax burdens and less efficient and productive economies in all countries, including Australia, because it reduces the global tax competition that can put downward pressure on tax rates.
Here’s a clip from the video recording of my conversation with Dan in which he explains the “Starve the Beast” strategy associated with US fiscal conservatives since the Reagan administration. Also check out his blog post Yes, Starve the Beast, featuring the clip.
Check out the full conversation by listening via the audio player or the Listen on Google Podcasts badge below. In additional to criticising what he calls the “global tax cartel”, Dan also talks about California’s “economic suicide” which has led to many entrepreneurs and creatives leaving California for lower-tax states such as Texas and Florida. Show notes for the episode can be found in your podcasting app and at the Economics Explored website. It was a great conversation and Dan was in fine form, being on a high after his beloved Georgia Bulldogs triumphed over the Alabama Crimson Tide in the US college football championship game earlier in the week.
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