PARIS — Global efforts to impose taxes on billionaires and multinational corporations are faltering, as former U.S. President Donald Trump pulls the United States out of an international tax agreement and threatens trade retaliation.
Trump, opposing what he called “discriminatory, disproportionate” taxes targeting American tech firms, warned on February 21 that his administration would respond with tariffs and other measures. “My administration will act, imposing tariffs and taking such other responsive actions necessary to mitigate the harm to the United States,” he said in a memo.
This move revives tensions between Washington and its allies over digital services taxes. France’s 2019 tax on digital giants prompted Trump to threaten tariffs on champagne and cheese. Since then, seven more countries have adopted similar taxes, with France alone collecting €780 million in 2023.
The European Union is now considering its own digital tax if talks with the U.S. break down. Meanwhile, Britain, seeking a U.S. trade deal, may review its current £800 million-per-year digital levy. British Trade Secretary Jonathan Reynolds said the policy is not “something that can never change or we can never have a conversation about.”
A 2021 OECD-led tax agreement involving nearly 140 countries aimed to address multinational tax avoidance. Its first pillar would allow countries to tax profits where they’re made, targeting big tech firms. The second pillar sets a 15% global minimum corporate tax, adopted by around 60 nations. But implementation of the first pillar has stalled.
“If the EU and other countries give up and allow American multinationals to exempt themselves, it will unfortunately spell the end of this very important agreement,” warned economist Gabriel Zucman.
Meanwhile, Brazil’s G20-led push for a 2% wealth tax on billionaires—potentially raising $250 billion annually—has also lost momentum. The Biden administration showed little support, and Trump, a vocal tax-cut advocate, is unlikely to back it.
The U.S. is home to nearly a third of the world’s billionaires, more than China, India, and Germany combined, according to Forbes.
At a recent conference, French economist Thomas Piketty urged unilateral action: “We need individual countries to act as soon as they can. History suggests that once you have a couple of countries who adopt a certain kind of reform… it becomes sort of a new standard.”
