The Treasury Should Disengage from the OECD Digital Tax Process
By Adam Michel Heritage Foundation Backgrounder No. 3445 October 29, 2019
The OECD is leading an international effort to rewrite the global tax rules with the goal of addressing how to levy taxes in the digital economy. The current proposal includes a new method of allocating a portion of consumer-facing corporations’ profits based largely on sales, rather than business location. Abandoning the corporate tax’s connection to physical location will immediately increase taxes on many of the largest businesses and could in the medium term lead to higher taxes for all businesses, hurting workers and consumers. Counter to the OECD’s goals, the proposal will also further destabilize the rules governing international corporate taxes. The Treasury Department and Congress should not approve any plan that overturns the physical-presence requirement for business taxation.