>> The G7 group of advanced economies has reached a "historic" deal to make multinational companies pay more tax
No, it hasn't. Some finance ministers met and talked:
"Finance ministers meeting in London agreed to battle tax avoidance by making companies pay more in the countries where they do business. They also agreed in principle to a global minimum corporate tax rate of 15% to avoid countries undercutting each other."
I have no idea how it works in other countries, but in the US, finance ministers don't have the power to agree to treaties. Treaties in the US require a super-majority (two thirds) vote in the Senate. Unless Mitch McConnell has signed off on this, the G7 group of advanced economies did not reach a deal on anything. I don't even see the word "Senate" in the entire article.
US Treasury Secretary Janet Yellen can tell reporters whatever she wants. Without buy-in from Republicans in the Senate, finance ministers agreeing "in principle" amounts to finance ministers agreeing that if they had ham, they could make ham and eggs, if they had eggs.
You're referring to the process of finalizing a treaty. That would be conceptually similar to "executing" an agreement between parties—the most important step that makes it legally binding!
But "reaching a deal" and "executing the agreement" are often different steps. When we have discussions with a client, and we negotiate on the terms we can reach an agreement on the negotiation before we actually execute the contract.
After reaching satisfactory terms in the agreement, I need to run the agreement by my business partner and ensure he approves. Sometimes the person who actually signs the contract may be a different party that I've never met or talked with during any part of our discussions.
All of which is to say the language here seems appropriate. The G7 has reached a deal—that doesn't mean the deal is now effective or legally binding. Deals that have been reached can still fall through. But the G7 has reached a deal. What they haven't done is yet made it legally binding through a formal treaty process.
Your analogy is flawed because you seem to be assuming that the people with execution authority are the ones who reached an agreement in principle. You’d expect them to succeed in papering it up.
That’s not the case here. The agreement in principle was reached by someone who has no power to do anything with regards to corporate taxes. Congress sets U.S. tax law and agrees to treaties. To do that, you need 60% or 66% of the Senate. It’s like the CFOs reaching an “agreement in principle” to something that requires Board approval—and a big chunk of the Board is hostile to management.
1. The finance ministers reach an agreement. This is what has happened.
2. A treaty is written and signed, normally by the head of state, but sometimes by the head of government (for the US in both cases the President). At this point the treaty in not yet legally binding, although according to international law the signatory country has an obligation "to refrain, in good faith, from acts that would defeat the object and the purpose of the treaty."[1]
3. The parliament (for the US the Senate) ratifies the treaty, making it binding.
4. The parliament (House and Senate in the US) creates the necessary national legislation to implement the provisions of the treaty.
5. The government creates the secondary legislation for the application of the national legislation created at 4.
Usually after 2. the other steps follow more or less smoothly, but there are some high profile cases where the ratification never happened (e.g. the Kyoto protocol).
> 3. The parliament (for the US the Senate) ratifies the treaty, making it binding.
Under international law, ratification happens when a state’s international representatives (head of state, ministers, ambassadors) formally lodge instruments of ratification with the depositary. (See Article 2(1)(b), Vienna Convention on the Law of Treaties.) When the US Senate "ratifies" a treaty, that is not ratification under international law, that is a domestic legislative procedure which confusingly happens to have the same name.
Under international law, legislatures are not involved in ratification, only the state's international representatives are (which almost universally belong to its executive). Domestic law may require those representatives to consult or seek approval from the legislature, but international law mostly (but not entirely) doesn't care about those requirements.
I would quibble that the name collision of the US Senate's "ratification" power is intentional and not confusing. When the Senate votes to "ratify" a treaty, it is authorizing the US government to perform the international act of ratification.
i.e. US domestic law governs the procedures by which the state can perform the internationally-recognized act of treaty ratification.
To be strict about it, the Senate never votes to ratify a treaty. It votes to give its "advice and consent to the ratification". The actual ratification is done by the Executive not by the Senate. But the Senate's advice and consent is popularly called "ratification" even though it isn't.
And the Senate's consent is not required to ratify a treaty. Ultimately the Executive decides whether to classify something as a "treaty" or an "international agreement". By classifying a treaty as an "international agreement", the Executive is allowed to ratify it without the Senate's consent. Such a ratification without the Senate's consent counts as "ratification" under international law but not under US domestic law. And that's why it is confusing, the meaning of the term "ratification" under US domestic law is a subset of its meaning under international law.
The Senate's consent is required to ratify certain treaties.
It all depends on what the treaty's terms require the government to do. If the terms can be fulfilled by executive power, the executive can sign and ratify on its own (executive agreement). If the terms need the force of congressional legislation to implement, it can be ratified on a regular legislative vote of both houses of congress (executive-legislative agreement).
The ones that require a Senate supermajority are the ones that "legislate" in areas outside of Congress's normal jurisdiction. e.g. the US Congress probably can't pass a law prohibiting states from using the death penalty, but with a 2/3 Senate vote it could sign a treaty banning it.
(Another advantage of going "up" a level is that repealing or withdrawing from a treaty is more difficult the higher you go, generally requiring a similar authority to withdraw as was used to ratify.)
> The ones that require a Senate supermajority are the ones that "legislate" in areas outside of Congress's normal jurisdiction. e.g. the US Congress probably can't pass a law prohibiting states from using the death penalty, but with a 2/3 Senate vote it could sign a treaty banning it.
It isn't clear that is actually true. Yes, the 1920 case of Missouri v. Holland appears to say that treaties ratified by the Senate can bind the states in ways that Acts of Congress cannot, but a number of legal scholars think there is a decent chance that SCOTUS would overturn that precedent if the issue came before it – see for example https://doi.org/10.2307%2F1123464
Suppose that, somehow, Democrats manage to gain control of both the Presidency and a two-thirds majority in the Senate. They then use that majority to ratify the Second Optional Protocol to the International Covenant on Civil and Political Rights, and then argue that the ratification outlawed the death penalty nationwide. A retentionist state goes to SCOTUS to challenge the treaty. If we assume the current conservative SCOTUS, I think a majority would likely overturn Missouri v. Holland and rule that the treaty is unenforceable as beyond the federal government's power. However, I doubt they'd rule that the legislative act of the Senate giving advice and consent, or the executive act of depositing instruments of ratification, was unconstitutional, merely that the treaty was not legally enforceable against the states. It is worth noting such a decision would not invalidate the ratification of the protocol under international law, and the US would still have an international legal obligation to obey it (unless and until they denounced it), even though the federal government would be legally powerless (under US constitutional law) to fulfil that obligation. (See also Medellin v. Texas.)
> The Senate's consent is required to ratify certain treaties.
In legal systems which adopt the dualist approach to international law, the international act of submitting the instruments of ratification of a treaty, and the domestic legislative acts necessary to enforce it, are two different things. Although the second act normally precedes the first, there is no requirement for such an ordering under international law. And I think it is very likely that SCOTUS would consider the executive act of submitting the instruments of ratification for a treaty to be beyond its power to judicially review; SCOTUS will confine its role to deciding what the legal consequences of that act are under domestic law. It may in some cases rule the executive act legally ineffective in creating domestic legal obligations, but in doing so it is not passing judgement on the constitutionality of the executive act itself. Suppose some President decided to ratify a treaty first, and hope to get legislation implementing it through Congress second. A risky move, in that if the legislation cannot be passed, the US could be left with international legal obligations which are impossible under domestic law to fulfil. But I don't see any evidence such a risky act would be either unconstitutional under domestic law or invalid under international law.
> (Another advantage of going "up" a level is that repealing or withdrawing from a treaty is more difficult the higher you go, generally requiring a similar authority to withdraw as was used to ratify.)
The President has unilateral discretion to withdraw from any treaty, irrespective of whether it is a treaty to which the Senate gave advice and consent, a congressional-executive agreement, or a sole executive agreement. So which type is used makes no difference to the President's power to withdraw. That was the effective holding of SCOTUS in the 1979 case of Goldwater v. Carter.
Now, the President does not have unilateral discretion to repeal a congressional-executive agreement insofar as it forms part of domestic US law, and the same may be true of a treaty to which the Senate gives advice and consent. But the President's inability to repeal the domestic legal effects of the treaty doesn't make any difference to the international legal effects of withdrawal – once the withdrawal is completed, it is no longer binding on the US under international law, even if some of its provisions continue to be binding under domestic US law.
I don't agree that domestic law always wins. It all depends on the situation.
If a country's domestic law violates international law, the extent to which that country gets away with it depends a lot on how powerful that country is. Great powers have much more ability to violate international law with impunity than small countries do.
And in this particular case, it is not that US law and international law are actually in conflict. It is just they assign different meanings to the same words. Even the US government generally accepts the internationally standard meanings in international fora.
Nations are sovereign they can do what they want. Short of going to war its hard to force a country todo something it does not want too. Although if you pull out of agreement don't expect the other country to continue following it.
Also there are other countries not part of this talk nothings stops a company from setting up there and doing the same tax games. So i dont see how this idea does anything
> Nations are sovereign they can do what they want. Short of going to war its hard to force a country todo something it does not want too
In today's world economic pressure is a much bigger factor than war. If you upset enough countries, they can all start imposing trade and financial sanctions on you, which then ruins your economy. International law is a useful (even though of course not always perfect) guide in answering the question "is doing X going to upset a large number of countries?"
> Also there are other countries not part of this talk nothings stops a company from setting up there and doing the same tax games.
Most of these companies are actually headquartered in major economies – US, the EU, etc. What they've been doing is exploiting complex loophole interactions between the tax laws of those major economies and the tax laws of small countries with favourable tax regimes. If the major economies close those loopholes, they can stop most of this. The small countries only get away with it because the major economy tax law loopholes let them. Most of the time, companies don't want to move their actual headquarters to these small countries due to the negative consequences
In international law, this is known as monism vs dualism.
Monism says that international law and domestic law form a single cohesive whole. International law automatically applies domestically, and domestic law which contradicts international law is automatically invalid.
Dualism says that international law and domestic law are two independent systems. International law only applies domestically if domestic legislation is passed or amended to make it applicable. Domestic law and international law can contradict each other, and in cases of contradiction the domestic courts will follow the domestic law and ignore international law.
Some legal systems have adopted monism and others dualism. And yet others, like the US, are actually a hybrid – US law is mostly dualist but with a few monist elements.
Yes, I gave a quick overview of the main steps, with minor inaccuracies to keep it simple.
Ratification itself is not required unless the treaty itself requires it. Countries do form agreements with “signed” but not “ratified” treaties. Sometimes even “exchanges of notes” can be binding.
> At this point the treaty in not yet legally binding, although according to international law the signatory country has an obligation "to refrain, in good faith, from acts that would defeat the object and the purpose of the treaty."
International "law" is always entertaining like this: Who enforces this "obligation"?
> The agreement in principle was reached by someone who has no power to do anything with regards to corporate taxes
I think you are considerably understating the power of the G7 finance ministers including the US Secretary of the Treasury. Sure, they can't ratify a treaty without the cooperation of congress. They're still extraordinarily powerful individuals and have loads of direct authority to shape tax policy.
My analogy is really just a reference to what "reached a deal" colloquially means.
"reached a deal" doesn't mean the deal absolutely 100% will be implemented. It means, the referenced parties have reached an agreement to something.
In this case, the leaders of the G7 countries have reached an agreement among themselves to have a minimum corporate tax rate. Note that the United States has no obligation according to this deal—only Joe Biden has agreed the deal. And Joe Biden has no legal obligation under the deal, he merely has a reputational one.
Since the agreed minimum corporate tax rate is 15%, and the United States corporate tax rate is 21% there's literally nothing Joe Biden needs to do in order to meet the terms of the deal he made with the other G7 leaders.
If they want to turn this into an international treaty, absolutely, GOP Senate votes will be needed (though, given that the treaty would create a floor that's 6 percentage points below our current tax rate, I would imagine those would be attainable votes—if the GOP created a global floor that was lower than our tax rate, they could use it to argue for lowering our corporate tax rate).
> It's not even that. Most international agreements are executed without a treaty.
Only in the US (and possibly a handful of other countries which copy the US approach). Under international law, all legally-binding international agreements are treaties. What the US calls "international agreements" are treaties from the non-US point of view.
> I would think a treaty requires all parties to it to think it's a treaty.
Well, even the US agrees that "international agreements" are "treaties" in the international law sense, despite not being "treaties" in the US domestic law sense.
> Any idea where I can read a bit more about the fundamentals
Unfortunately it isn't easy to get your hands on. You can buy a hardcopy for US$173 plus shipping. Or you can do what I did, and read it for free in a university library. (It is also included in Westlaw subscriptions, but unless you already have access to one, buying the hardcopy would probably be cheaper.)
> That term has a different, and as I understand, more nebulous meaning under international law?
The most common way to make an international agreement not legally binding is to put a clause in there explicitly stating that it isn't legally binding. When the agreement explicitly states it isn't legally binding, then it clearcut isn't.
If an agreement is in the usual written form of a finalised formal agreement, it is generally going to be assumed to be legally binding unless it explicitly states it isn't.
Generally speaking, to be binding under international law, the parties have to have "international legal personality". That basically means the parties must be the national governments of sovereign states, or international organizations established by treaty. An agreement involving private corporations, private individuals, subnational governments, non-governmental organisations, etc, generally isn't going to be legally binding under international law, even if it also includes national governments among its parties. Occasionally, dependent territories are granted power by the national government to sign legally binding international treaties on certain topics (such as Hong Kong and Macau), but that is an exception to the general rule.
There are grey areas which lawyers and scholars will debate, but it rarely turns into a live issue in practice.
I used to want to be a lawyer. I even applied to law school once but didn't get in. Probably if I kept on trying I would have gotten in eventually but just decided to stick with software engineering instead.
>> After reaching satisfactory terms in the agreement, I need to run the agreement by my business partner and ensure he approves
Do you think Mitch McConnell sees US Treasury Secretary Janet Yellen as his business partner? Or vice versa? That's your perception?
>> The G7 has reached a deal—that doesn't mean the deal is now effective or legally binding
So if I'm negotiating with you and you tell me we have a deal, I should consider that to be something that may or may not happen, may or may not be effective, and may or may not be legally binding?
Assume we’re going back and forth in negotiations. After a few back and forth a, with small changes each time, I send you over some language and you say: “That’ll work, I’ll draw up a contract and send it over to you”.
At that point, I would tell people internally to my company that we have a deal with that client.
But we don’t count on that revenue arriving, until we have a signed contract in place. Anything can happen between the negotiation and the contract being signed. The client could come back to us and say “there’s been a sudden change in priorities on our end, and we’re cancelling the project”. Or they might come back with any other change that they want “when I sent this to my VP, he said the top line number wouldn’t work, and we need to move it again, I’m so sorry!”
Yes, we don’t consider anything to be legally binding until the contract is signed. We “had a deal”, but deals can fall through.
If you deal in any contract worth more than a few hundred dollars, I really recommend you take the same attitude: everything is provisional until the final agreement is written down and signed.
> Which car company do you work for?
Was that necessary? Really? You can make your point without attempting to attack people.
> > "The G7 group of advanced economies has reached a historic deal to make multinational companies pay more tax"
> Is that true?
Yep! Because a "deal" can be something that is provisional. "Reached a deal" to me doesn't in any way mean that the deal has been executed, finalized and is legally binding. It means the first step of negotiations has been completed and all parties are agreeing to the terms of the deal.
Look, we're just arguing about the semantics of how final "reached a deal" is. I think it's not very final (especially when discussing large multiparty negotiations like the ones described here). You seem to think it refers to an absolutely final step. That's fine! English is messy and we can disagree about what specific phrases mean. I'll just caution you that most of the world will use the phrase "reached a deal" to refer to negotiations that are preliminarily complete, but the terms not having been formally adopted or legally finalized.
That's totally fair! I don't disagree that people who reach a deal shouldn't change the deal after that point (though the UK government seems to think it's fine).
But, suppose the following events happen:
- we reach a deal on some cool project
- reporters announce that we have a deal on the cool project
- I decide to back out of our agreement and not go forward with the cool project
- reporters announce that I backed out of our agreement
- You condemn me for my treachery, and tell everyone that I'm a backstabbing two-faced used-car dealer
- reporters announce that you have condemned me
The reporters aren't wrong at any step in this! We did have a deal, and it's correct to report on it and correct to say we had a deal. Even if the deal ultimately fell through to my used-car treachery.
I'm not saying people shouldn't hold to the deals that they make (though you seem to think that's my argument, so I must've made my point poorly somewhere along the way). 100% of my point is "reached a deal" doesn't mean it's final, and it's OK and even correct to say that a group of people have reached a deal—even if you don't think that deal is feasible.
Another example: Let's say that I form a deal with 10 investors that I will guarantee them a risk-free 50% annual return on their investment. You would be absolutely correct to say that I was probably lying! You would be correct to say it's clear that malfeasance exists! But you would be wrong to say that we didn't reach that deal. We did reach that deal, even if you think there is a 0% chance that the deal will actually be accomplished in the real world.
>> So if I'm negotiating with you and you tell me we have a deal, I should consider that to be something that may or may not happen, may or may not be effective, and may or may not be legally binding?
I hope you don't touch contracts in your job. Until a contract is signed nothing is official.
There's all sorts of outcomes here. While you may be right that the US will not sign on to the deal it might still have to deal with some consequences. E.g. while Yellen may not have the ability influence US tax laws there are also foreign tax laws that are part of this over which McConnell has no control. Let's say the rest of the G7/G20/OECD changes the way they tax global companies, if the US doesn't ratify their side there's still plenty of real world consequences. I think Yellen's agreement does count as in this is the US's (sort of foreign policy?) position, i.e. the rest of the world can proceed to make changes based on that agreement even though Yellen does not have the authority to commit to changing US tax laws.
>> I think Yellen's agreement does count as in this is the US's (sort of foreign policy?)
No it doesn't work like that.
To get anything done, you need Republican votes. I have no idea, I haven't checked this afternoon, how many Republican votes do you have for a minimum corporate tax?
That's what I want to know, I'm guessing it is zero, but let me know what the number is.
I'm not sure why Canada imposing a tax on Google's revenue in Canada requires US Republican votes? Or what the Republicans would do about it? So seems like we can get a lot of things done without those votes. Most of these companies are US based and they are effectively dodging taxes in other countries, it's not the US tax laws that impact those for the most part.
But it could be an informal agreement between the leaders of these countries, that they will all pass such laws. In that case, passing a law that changes the corporate tax rate would fit into a reconciliation package with no issues.
Though, if it’s an informal agreement then no such law even needs to be passed, since our corporate tax rate is above the agreed minimum.
Offhand, does someone know which countries that belong to the G7 and made this "historic agreement" have higher tax rates than that agreed upon?
Edit
In an alternate universe I wish the title was"G7 agrees to carbon tax" that would certainly level the playing field...I mean surely intrinsically FANG's are highly carbon intensive if you took into account the pollution they help generate through added energy usage (delivery trucks every day, lots of packaging, server farms etc) and the highly paid jobs which fuel inflation, consumption and speculation...(p.s. please don't feel ruffled)
> Isn't ratifying a treaty something completely different?
Sure, but there is a distinction between treaties in international law and those under the Constitution; by far the most common way for treaties in the international law sense to be adopted in tbe US in the last several decades is as Congressional-executive agreements, which are, procedurally, either normal legislation submitted after an executive-negotiated agreement or an executive-negotiated agreement under authority granted by normal legislation.
To be clear, Constitutionally the United States Senate only needs a majority to pass a law that changes the Taxes collected from corporations.
The Senate Filibuster which requires a 60-vote majority is not a Constitutional provision, and you wouldn't strictly need a Treaty for this agreement, if all the countries simply adopted the same tax provisions.
So, if the Democrats had the vote for it, they could pass this law with 0 Republican votes. In fact, since raising taxes is a budgetary measure, they could absolutely pass the corporate tax increase on reconciliation and do it with 0 Republican votes and without touching the filibuster. So, it seems quite plausible to me that this will happen.
Reconciliation is a process within Congress by which the Senate does not impose its not-Constitutionally-required supermajority requirement to certain budget-impacting measures.
So, no, its use doesn’t bypass Constitutional powers (not rights, which are not attributes of government bodies) of Congress, it is a means by which Congress has chosen to exercise them.
You don't need to ratify a treaty through reconciliation. There's no need for this to be done with a formal treaty. It could simply be each of the nations passing laws that do the same thing.
If the Senate passes a law that changes the corporate tax rate to a certain amount, that is a budgetary measure that could absolutely be passed with reconciliation.
Yes, this law wouldn't be a treaty, but it could have a similar effect.
> If the Senate passes a law that changes the corporate tax rate to a certain amount, that is a budgetary measure that could absolutely be passed with reconciliation.
If it was revenue-neutral, sure. That is unlikely to be the case with changes to corporate tax rates. And even then, you are going to have a hard time getting even 50 votes.
No, revenue-neutrality doesn't weigh in favor of being eligible for reconciliation; a measure must principally address either spending, revenue, or the debt limit to be eligible for that process.
That’s an incorrect description of the budget reconciliation process.
One of the budget reconciliation categories is explicitly for revenue, which means being revenue-neutral would make it harder to pass under reconciliation.
Being an aspect that explicitly impacts revenue makes it much easier to pass under the revenue reconciliation process. In fact, adjusting those rates would be a pretty straight-down-the-middle use of reconciliation.
> You are not going to ratify a treaty with the required 2/3 votes in the Senate via reconciliation
Which is among the reasons this won’t technically be a treaty in US law (even if it is in international law), but a Congressional-executive agreement [0].
The US corporate tax rate is 21%, above the 15% minimum that was proposed. Furthermore, it was the Trump administration who introduced GILTI and BEAT, both measures aimed at taxing foreign profits in low wage and low tax countries. Now, of course, republicans are probably loathe to give the White House any "wins", so that might throw a spanner in the works, but republicans don't have any love for tax havens.
An agreement can be reached without a treaty. But that's not even super relevant here.
The US doesn't need to change any laws to meet this agreement. We already tax our corporations more than 15%. What the US wants is for other countries to tax that much, to discourage our own multinationals from booking revenue outside the US to avoid US tax. The EU wants companies to book revenue where they make it, which they can do all on their own. They don't need the US for that.
And what makes you think the GOP wouldn't support this? It would give them cover to lower the tax rate to 15% from 21% to "be in line with the rest of the G7". Also, if our multinationals can't avoid tax anymore, there is a good chance they would just book their revenue here in the US, leading to more revenue for the US and less for Europe.
The agreement changes the way a company revenue is recognized and allocated between jurisdictions. I suspect it may require to change the tax treaties between those countries. It's not just changing the corporate tax rate.
From what I can tell with what's out there on there internet, the main change is allowing local jurisdictions to tax a company on the money they make in that country, even if they have no presence there.
So again, it would just increase revenue for the US, and I see no reason they wouldn't agree to it.
At the end of the day, I don't think the US had to compromise here. I think it's universally better for the US government, just not US based companies, but it gives the GOP enough air cover to agree to it anyway.
It mostly benefits the European countries that are missing their tax revenue.
It will also massively increase the complexity of doing taxes for smaller businesses. It wouldn't surprise me if it lead to even more websites going "sorry, we value customers from your country, but we cannot serve this content to you".
Imagine running a small business and somebody from Algeria wishes to purchase your software. Is the $5 you make worth having to file Algerian taxes?
I mention this, because this is something that happened with YouTube this month. Content creators have to give their tax info to YouTube because the US is now charging taxes from creators outside the US on money they made on US customers.
Edit: as was pointed out - there's a minimum $10 million threshold. That makes it far more reasonable.
Ah, I missed that part. You're right in that case! I'm just so used to the EU coming up with new rules without reasonable exemptions that I assumed the same here.
Sorry, I missed where this was mentioned in the article. Can you supply a link to the reference if it is not in the article?
I did see the following quote:
> The rules on making multinationals pay taxes where they operate - known as "pillar one" of the agreement - would apply to global companies with at least a 10% profit margin.
"Every journey of a 1000 miles begins with 1 step"
Maybe we should laude and celebrate that at least loads of effort was put into getting all the G7 finance ministers in one place and actually have a discussion + agree to a next step?
Feels unnecessary negative and very arm chair criticism to just hand wave the whole endeavour and say "oh nothing was done and all they did was talk".
I sometimes think people in the last decade are to quick to find faults for every little thing that falls short of a 100% effort (and even that gets criticism) without even considering that they are not the men-in-the-arena [1] doing the hard work.
----
[1] Whenever I think of criticizing something/someone, I always consider Theodore Roosevelt comment on this sort of behaviour where he once said:
"It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat."
> Feels unnecessary negative and very arm chair criticism to just hand wave the whole endeavour and say "oh nothing was done and all they did was talk"
They don't have the authority to negotiate the agreements that were described in the headlines as already being made.
That's called bullshit. Doesn't matter which side politically you are on, it's bullshit. Why is the BBC printing bullshit?
They don't have that authority, the BBC is lying to you, why are they doing that?
No, as has been pointed out to you - multiple times - reaching a deal is not equivalent to a deal being legal.
> The BBC is not lying
No, just the status quo BBC propaganda. Let's review some quotes.
> the arrival of the Biden administration in the US, created a moment of opportunity.
> A minimum corporation tax rate of 15% is rather low
> European finance ministers succeeded in including the phrase "at least 15%", which offers a path to get that number higher.
> Tech firms say they welcomed the move.
> A process has begun, a precedent has been set. It may or may not end up being transformative, but this moment is historic.
This last quote is the BBC admitting to painting this as if it was a contract being signed.
Let's continue.
> more tax revenue would be raised from large multinationals and would help pay for public services.
Only public services? Not military? Salaries? Government contracts? etc., etc.? Well, this IS historic!
> Ms Yellen said there was an understanding that national digital services taxes such as those levied by the UK and EU countries would be scrapped and replaced by the new agreement. Such taxes are regarded by the US as unfairly targeting American technology giants.
So, the tech giants get a new tax standard that benefits them over the existing standard?? Funny, this really does go along with the previous quote:
> Tech firms say they welcomed the move.
And here is another interesting quote to focus on:
> Paolo Gentiloni, the EU commissioner for the economy, described Saturday's agreement as a "big step... towards an unprecedented global agreement on tax reform"
It sets a precedence that nothing about what is being done could even be remotely criticized except for it possibly not being enough.
It's laughable. How anyone does not see this as North Korean Kim Dynasty style propaganda is beyond redemption and likely has a double digit IQ.
Then the article ends with three quotes from Amazon, FB, and Google.
Gee, I wonder who sponsored this article (and possibly helped coordinate this meeting).
It couldn't be techopolies trying to cozy up with existing government officials in the hopes of securing an agreement that is mutually beneficial for everyone.
But, paying more money is never beneficial for a company. So, game-theoretically, and thus purely mathematically-speaking: what benefit could these tech companies be receiving from this new arrangement?
Hmm ... surely, in our modern crony capitalist system, it wouldn't be anything corrupt in nature?
Classic HN, two downvotes and no one is capable of providing a counter-argument. The unintelligent flourish far too easily here. They should have more demanded of them. There are no clear incentives to not just throw a punch and run away like a coward on this site.
I was under the impression that "agreed upon" for international diplomacy was regularly used before ratification by any national government or parliament, because that is usually the required first step. It might still fail later on before becoming law.
I think it is the same for national things as well, e.g., two government parties in a coalition "agreeing" to make a law, even though it was an out-of-parliament discussion and has not been voted on in parliament and might never make it that far.
> Treaties in the US require a super-majority (two thirds) vote in the Senate.
That's misleading, because what are called “treaties” in international law include more than what are called “treaties” in US domestic law, but also “Congressional-executive agreements” and some (but, IIRC, not all) “sole executive agreements.”
Virtually all “treaties” in the international sense that have come into force in US law in recent decades have been Congressional-executive agreements.
Except it doesn't require the status of a treaty for the United States. Since the current corporate tax rate in the US is above the 15% agreed upon, it doesn't really matter if the senate signs on the deal or not. And the senate has little reason, even as republican-majority, not to when it's mostly a deal restricting small countries for offering tax rate too low.
Not every international agreement is a treaty. You're right, though; this is merely an agreement in principle and has no force whatsoever. That doesn't mean it won't lead to actual legal changes, but this article is misleading.
> this is merely an agreement in principle and has no force whatsoever
You mean that it's unenforceable in a court, but that doesn't mean at all that it lacks force:
Court enforcement isn't the the only force. If your boss, client, spouse, etc. pressures you to do something, it can't be enforced in a court, but it can have great force. We all are subject to great social pressure in our behavior, conduct, life choices, etc. - we all generally speak the same language, dress the same, follow the same life and career paths, avoid socially unacceptable things (even those that are unfairly discriminated against), etc. HN mods have great influence here, even though they have no means of court enforcement (in any practical sense).
International relations in particular has no law, in the sense of a court that can make enforceable decisions. In a sovereign legal sense, it's anarchy. There is no international sovereign government (the UN is a conference of sovereign governments). But obviously a great deal is done which has real force. It's actually very interesting to see the creative ways in which 'international law' (again, not the same as a sovereign government's law) is crafted, given that very significant constraint, in order to give it force and effectiveness. Note that the G7 is exceptionally influential despite having no legal power - why do you think these very powerful, busy people are spending their time there?
The President controls the Executive Branch of the U.S. government. Their decisions have great legal force. Politically, those decisions mostly carry forward to future presidents.
In the US, executive orders cannot change tax law, since the "power of the purse" is constitutionally reserved for congress.
If you're thinking of the Iran nuclear deal, that's head-of-state stuff where the president is considered to have more powers (though of course it still was never a treaty, so could be/was scrapped easily by the next administration).
They can make all the agreements they want, but it's not a legal treaty until 2/3 of the Senate agrees, and even then, this stuff requires that laws be passed -- many laws affecting jurisdiction, accounting standards, and the tax laws themselves. None of this can be done with an executive agreement.
> They can make all the agreements they want, but it's not a legal treaty until 2/3 of the Senate agrees
That's not true under international law. The confusing thing here is that "treaty" means different things under international law and US law.
Under international law, any legally binding agreement between two countries is a treaty.
Under US law, there are three types of agreements between the US and foreign states (or international organizations): treaties, congressional-executive agreements, and sole executive agreements. The first are approved by two-thirds vote in the Senate, the second by an ordinary Act of Congress, the third by the President acting alone (without Congressional involvement.) But all these three are considered equally to be treaties under international law. The distinction between the three is purely a US domestic law distinction. Article 46 of the Vienna Convention on the Law of Treaties says that domestic law does not determine the validity of treaties under international law unless the violation is manifest, which means that for most purposes the rest of the world can just ignore this US-internal distinction.
The authority to ratify treaties, in the international law sense of "ratify" and "treaties", solely belongs to the President (and the Secretary of State, and ambassadors, acting on the President's behalf). When the US constitution speaks of "ratifying" a treaty by the Senate, that is not ratification under international law. That's actually a domestic US legislative procedure which confusingly happens to have the same name.
> many laws affecting jurisdiction, accounting standards, and the tax laws themselves. None of this can be done with an executive agreement.
In practice this will likely be done by an ordinary Act of Congress (a "congressional-executive agreement") which only requires an ordinary (not two-thirds) vote in the Senate.
However, one needs to understand that ratifying a treaty under international law, and passing domestic legislation to implement it, are independent things. Under international law, the President or Secretary of State can legally submit the instrument of ratification for the treaty even if Congress hasn't passed any implementing legislation. International law doesn't care about implementation legislation, that's a domestic law concern. Now in practice the President or Secretary of State wouldn't do that, because that is not the traditional practice of the US. But other countries in the world do sometimes ratify treaties before the implementing legislation is passed. That generally happens in systems – whether Westminster democracies or non-democracies – in which the executive can be confident they'll get the implementing legislation passed.
And those executive agreements have no binding legal force, and can be broken by the next executive (or even the same executive who made them) on a whim. See, for example, the Iran deal and the Paris climate deal.
I agree with your main point but I wouldn't say executive orders lack binding legal force. They derive binding legal force from congress or the constitution first telling the executive branch "you go figure out the details here."
Foreign policy.
The SEC.
Heck, the emancipation proclamation was an executive order. Everyone knew Lincoln and his contemporaries wanted to abolish slavery, but Lincoln was absurdly careful at the time to frame the proclamation as a wartime measure aimed at crippling the south's economy. He went out of his way to appeal to existing commander-in-chief powers in order to make it lawful.
Yes it has. Several other comments have pointed out 'reaching a deal' vs. 'it has been enacted everywhere'; I'll just add that it's not at all novel language, e.g. Brexit saw the UK & EU reaching deals before (or without ever) enacting them.
> in the US, finance ministers don't have the power to agree to treaties
The U.S. Secretary of the Treasury speaks for the President; it's a fundamental dynamic of organizations. Otherwise, effectively Yellen wouldn't be Treasury Secretary - Yellen would be powerless and meaningless - and would resign or be fired. Only Trump seemed to ignore this and undermine the people under him. Also, I expect that the Treasury Secretary has great legal authority to make binding decisions for the U.S. government; remember that the American people decided the cabinet members would be separately confirmed by Congress (i.e., the Senate), per the Constitution.
Similarly, if the CFO of Apple makes an agreement, the counter-party assumes they speak for CEO Tim Cook. Otherwise, why talk to this person?
> Treaties in the US require a super-majority (two thirds) vote in the Senate.
Most international agreements are not treaties. The people of the U.S. delegate the power to conduct foreign affairs almost exclusively to the President, again in the Constitution. Only certain actions, such as treaties, require Congressional approval.
There is far more to U.S. government than the Constitution, which is only a framework. There are an enormous body of law, court precedents, institutional customs, federalized government, and of course public opinion.
Among that body of law are existing tax rates, which are currently over 15% for corporations. Under the Constitution, the President must agree to changes in tax rates unless their veto is overridden.
You're right that Congress theoretically could violate the agreement, but in practice, it's almost irrelevant. They could theoretically pass a bill tomorrow that eliminates every tax and every law in the U.S.
Could you provide something to backup your statement?
As further examples of my point, beyond the laws, legal precedents, customs, and institutions mentioned above: None of the executive branch departments (State, Justice, Defense, Treasury, etc.) are mentioned in the Constitution. No federal court besides the Supreme Court is mentioned. Even specific laws are only loosely defined; for freedom of speech, no provision is made for slander, fraud, harassment, government secrets, etc.; for the right to bear arms, nothing defines what 'arms' are (and I don't suggest we try to define them here). The filibuster and other Congressional rules are not defined. Etc.
Exactly Zero of anything you have just said negates the point that was made.
Let's reiterate:
> Here's what it says in the Constitution:
> "The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises"
> Crystal clear.
Anything that is not explicitly defined in the Constitution is certainly left up to the interpretation and decisions (within their constitutional authorizations) of the three branches of government.
However, anything that is explicit in the constitution cannot be overturned without a constitutional amendment.
Based on experience in Internet forums, I believe we either need to be in a 'curious state' or the conversation isn't worthwhile - in fact, it's a negative - and I think when someone says 'Exactly Zero' of my comment has value, they aren't curious.
> They also agreed in principle to a global minimum corporate tax rate of 15% to avoid countries undercutting each other.
Why? If a country can be more efficient, why must they be penalized by being required to raise taxes? This is the equivalent of a price floor. Why should a country be required to have higher taxes to appease those that make different policy decisions? It should be up to the government (voters) what tax rates work for their country. Why wouldn’t a tax rate ceiling be proposed instead? Why should Ireland raise taxes just because France wants to run huge healthcare deficits or offer extremely generous train worker pensions? Seems like decisions on tax rates should be left to the country. If a country wants a 50% tax rate, that’s their business. If they are economically harmed by someone else having a 10% rate, then the problem isn’t that someone else has a lower cost but that they have too high a cost.
As far as the 2/3 rule for US treaties, that’s a good thing. That ensures that treaties are good for the entire country rather than just a simple majority. I don’t want 51% being able to ignore 49%. If Republicans were in power and proposed a maximum tax rate treaty, those complaining about the 2/3 rule would be singing a different tune. The Constitution was designed specifically to ensure that a narrow majority isn’t able to run roughshod over everyone else. Gridlock is a feature, not a bug. And that feature benefits everyone at different times.
Ireland is part of the EU, so how it taxes corporations is something it has to negotiate with the rest of the EU. That is its problem, not something the G7 care about. Ireland has attracted investment and revenue by undercutting other nations, while providing access to the EU. Not surprisingly, the rest of the EU is not happy about that.
No one is denying nations the right to set their own tax rates for corporations. What has happened here is that a number of nations have come together, negotiated, and agreed that they will each set their lowest rate at 15%.
The reason for that is deliberately to stop countries undercutting each other. They have all agreed that undercutting each other has lead to consequences that have affected them all equally in a "race to the bottom" and of corporate tax avoidance.
> If they are economically harmed by someone else having a 10% rate...
The G7 nations have agreed that they don't want to be economically harmed. Their agreement is to pass laws in each of their environments to stop that. They've also agreed that each of them can tax the profits made locally to them. They agreed to limit that to a maximum of 20% of the corporate's global profits.
As for the 2/3rds rule for US treaties, that's because the Senate, representing the States (not the people), is given a "check" over the President unilaterally making treaties, as far as the United States is concerned, because treaties made in this way are considered equal in power to the Constitution. Each treaty is effectively an amendment to the US Constitution.
So it's not about 51 vs 49%, it's about 2/3rds of the US states, as represented in the Senate, agreeing with a treaty.
Evidently you know little or nothing about the EU. Taxation by member states of the EU is a sovereign national competence and the Irish have both a veto over change and a likely requirement to hold a national referendum over any change.
If you do some research you'll find that there is zero evidence of any EU countries shifting profits to Ireland. Almost all of the profit shifting which Ireland is blamed for facilitating is undertaken by a handful of US MNCs enriching their shareholders at the expense of US taxpayers via mechanisms enabled first and foremost by the US govt
They print the money, though! They can force businesses to denominate in dollars, inflate the dollar to construct a 15% tax, and make up the difference for individuals through transfer payments and UBI.
I’m making a rhetorical point here, but this isn’t as far fetched as it might sound at first. When you look at the numbers coming out of the fed, it’s pretty clear who is calling the shots and it’s not the Congress.
No, it hasn't. Some finance ministers met and talked:
"Finance ministers meeting in London agreed to battle tax avoidance by making companies pay more in the countries where they do business. They also agreed in principle to a global minimum corporate tax rate of 15% to avoid countries undercutting each other."
I have no idea how it works in other countries, but in the US, finance ministers don't have the power to agree to treaties. Treaties in the US require a super-majority (two thirds) vote in the Senate. Unless Mitch McConnell has signed off on this, the G7 group of advanced economies did not reach a deal on anything. I don't even see the word "Senate" in the entire article.
US Treasury Secretary Janet Yellen can tell reporters whatever she wants. Without buy-in from Republicans in the Senate, finance ministers agreeing "in principle" amounts to finance ministers agreeing that if they had ham, they could make ham and eggs, if they had eggs.