The Grassroots Corner September 29th, 2025

THE WORLDWIDE MINIMUM CORPORATE TAX COMES UNRAVELED

 

            Recently, German Chancellor Friedrich Merz urged suspending the minimum corporate tax for large companies, which 140 countries had earlier agreed to. Why does Chancellor Merz’s opinion matter to FAIRtax supporters?

            The previous U.S. administration and other countries had endorsed a 15% minimum corporate income tax. The purpose of this tax was to prevent a race to the bottom with companies seeking to locate in the jurisdiction with the lowest business tax rate.  They wanted to prevent the situation where countries with the lowest corporate tax rates would pull companies away from countries with higher tax rates, and companies in low-tax jurisdictions would avoid paying their fair share.

            For the FAIRtax, however, a global minimum corporate tax rate would be a disaster.  The FAIRtax eliminates all income taxes, including the corporate income tax.  Obviously, having a corporate income tax rate of zero would violate any effort to establish a minimum corporate income tax rate.  In that case, other countries would put pressure on the United States to abandon the FAIRtax.

            The German newspaper Welt reports that President Trump is opposed to the idea of a minimum corporate tax rate, and the G7 countries conditionally exempted American businesses. Chancellor Merz also has reservations about the tax. At a meeting of the Bavarian Cabinet atop the Zugspitze Mountain, Merz shared the opinion of Bavarian Finance Minister that Germany “cannot maintain the so-called minimum tax because the Americans have pulled out, and the concept has no future anyway.”

            Welt reports that, according to the minimum tax, companies that conduct international business and have more than €750 million ($872 million) in gross receipts must pay at least 15% on their profits, regardless of where the profits originate.

            Bavarian Finance Minister Albert Füracker stated that. “A global minimum tax can only achieve its purpose if the important global economic players participate. After the U.S. and its companies were exempted by the G7 decision, the minimum tax makes no sense in its present form.” A predominantly European enforcement of this tax threatens to put European companies at a massive tax and administrative disadvantage.

            Welt reports that when Trump assumed office, he declared the minimum tax invalid in the U.S. The White House views the global tax treaty as an intervention in national sovereignty over finance and taxation. The G7 countries have been looking for a compromise with the U.S. that exempts U.S. companies but subjects them to a parallel U.S. regime.

            Unlike Chancellor Merz, German Federal Finance Minister Lars Klingbeil, whose political party differs from Merz’s, welcomes the compromise.

            I would love to hear from you if you contact the Trump Administration and urge it to stand its ground on the global minimum tax to preserve the future for the FAIRtax. You can share your views here: https://www.whitehouse.gov/contact/. Please send me a copy of your message to the President.
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