FLASH
Shkruar nga Joseph E.Stiglitz
Trump has even signed an executive order to create a “strategic cryptocurrency reserve,” and held the first cryptocurrency summit at the White House.
In a world where capital and wealthy individuals can freely cross borders, only international cooperation can ensure that multinational corporations and the wealthy are taxed fairly. But Trump refuses, and his administration has embraced cryptocurrencies.
Donald Trump is rapidly transforming the United States into the largest tax haven in history. Suffice it to mention the Treasury Department's decision to withdraw from the transparency regime on the real identity of company owners; the Trump administration's withdrawal from negotiations to create a UN framework convention on International Tax Cooperation; its refusal to implement the Foreign Corrupt Practices Act; and the removal of many regulations on cryptocurrencies.
This appears to be part of a broader strategy to blow up 250 years of institutional protections. The Trump administration is violating international treaties, ignoring conflicts of interest. It has also dismantled checks and balances and seized funds appropriated by Congress.
The current administration is not arguing about policy, it is violating the rule of law. But Trump wants a tax: tariffs on imports. He seems to believe that foreigners are footing the bill, providing the money to cut taxes for billionaires. He also believes that tariffs will eliminate trade deficits and bring manufacturing back to the United States.
In fact, tariffs are paid by importers, raising prices in the US. They are being imposed at the worst possible time, the tax being taken out of a period of high inflation by the US. Moreover, even basic macroeconomics lessons show that multilateral trade deficits reflect the imbalance between domestic savings and domestic investment.
Trump's tax cuts for billionaires will widen the gap, because deficits subtract from domestic national savings. Ironically, policies like tax cuts for billionaires and corporations increase the trade deficit. Since Ronald Reagan, conservatives have argued that tax cuts boost economic growth.
But it didn't work that way for Reagan, and it didn't work that way for Trump during his first term. Empirical studies have confirmed that tax cuts for the wealthy have no measurable impact on economic growth or unemployment. On the contrary, they immediately and consistently increase income inequality.
The proposed extension of the Tax Cuts and Jobs Act in 2017 alone—the largest corporate tax cut in U.S. history—will add about $37 trillion to the U.S. national debt over the next 30 years, without providing the promised boost to economic growth.
With his policies, Trump is widening the trade deficit even at the microeconomic level. The US has become a service economy. Among its biggest exports are tourism, education and healthcare. But Trump has systematically undermined each of them.
What tourist, student, or patient would want to come to the United States knowing that they could be arbitrarily stopped at the airport and held in jail for weeks? The damage to America's leading educational institutions, the arbitrary cancellation of student visas, and the devaluation of scientific research have overshadowed these vital sectors.
Trump's strategic approach is already showing signs of failure. China is one of America's largest trading partners, and the United States depends on it for its most important imports. China is retaliating with tariffs. Fears of stagflation - high inflation combined with weak economic growth - have hit stock and bond markets.
And that's just the beginning. Due to the Elon Musk-led Department of Government Efficiency, tax revenues could fall by over 10 percent this year due to the way it's being implemented.
A reduction of about 50,000 employees of the main tax authority, the IRS, would result in the loss of about $2.4 trillion in revenue over the next 10 years, compared to the projected increase of $637 billion under the provisions of the Inflation Reduction Act, which aimed to increase the number of IRS agents.
The agenda is clear: not just lower tax rates for the wealthy, but weaker enforcement of the law. In a world where capital and wealthy individuals can freely cross borders, international cooperation is the only way for multinational corporations and the super-rich to be taxed fairly.
In this context, the ban on the collection of ownership data, the toleration of cryptocurrency markets that make anonymity difficult, and the abandonment of the process to draft a new UN tax convention and a global minimum tax, reveal a deliberate pattern: the dismantling of multilateral frameworks designed to combat tax evasion and money laundering.
What we are seeing is a clear attempt by Trump, Musk, and their billionaire friends to create a kind of capitalism modeled after tax havens. This is an all-out assault on any law that threatens the extreme accumulation of wealth and power. And nowhere is this more evident than in their embrace of cryptocurrencies.
The boom in unregulated crypto exchanges, online casinos, and online gambling platforms has fueled the further expansion of the global illicit economy. Under Trump, the Treasury Department has lifted sanctions and regulations on platforms that hide transactions.
Trump has even signed an executive order to create a “strategic cryptocurrency reserve,” and held the first cryptocurrency summit at the White House.
The Senate followed suit shortly after by repealing a provision that required crypto platforms to identify and report users.
Trump, who has issued a controversial cryptocurrency himself, has appointed his confidant Paul Atkins to head the Securities and Exchange Commission. Cryptocurrencies are about one thing: secrecy. We have very good currencies like the dollar, yen, euro, etc.
We also have efficient trading platforms for purchasing goods and services. The demand for cryptocurrencies stems from the desire to hide money. People involved in illegal activities, including money laundering and tax evasion, do not want what they do to be easily traceable.
But the rest of the world cannot sit idly by. We have seen that global cooperation can work. And this is demonstrated by the global minimum tax of 15 percent on the profits of multinational corporations, which is being imposed by more than 50 countries.
Within the G20, the consensus reached last year under the leadership of Brazil requires the rich to pay their fair share. The US has distanced itself from international agreements, but paradoxically, its lack of diplomacy could help strengthen multilateral negotiations to deliver a more ambitious outcome.
In the past, the US would demand that a deal be watered down (usually for a vested interest) but ultimately refuse to sign. This was also the case during the OECD negotiations on the taxation of multinational corporations. Now, the rest of the world can move forward with designing a fair and efficient global tax architecture. / Adapted from “Pamphlet” by “Project Syndicate”
*Note: Joseph E. Stiglitz, Nobel Prize winner in economics and professor at Columbia University. He was previously chief economist of the World Bank and head of the US President's Council of Economic Advisers.
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