You’ve read about my concept to make corporate taxes more fiar and inclusive for years.  No, I am not running for President.  But, that doesn’t mean I don’t have better ideas, ones that our government (and other world governments) should adopt to stop the erosion of capital (and tax revenue!) from the shores of the countries from which these funds were developed.

And, as I’ve continually stated, it’s only the smaller companies in the US that get saddled with those bandied-about 35% tax rates.  Most of the Fortune 500 entities pay 12%, 10%, 5% or NOTHING into the US treasury.  Which is why, over the past quarter century, the contribution of corporations to the US treasury has dropped to something on the order of 10% of the total revenue collected by the US government.  With those citizens in the lower middle class and the poor anteing up 45% of the total.  And, with the rest of the citizens of the US (and foreigners subject to US taxation) covering that last 45% portion.

You’ve also been reading how some US based companies are acquiring mini-companies in other tax jurisdictions, so they can renounce their US citizenship and avoid paying even the 5% tax rate they currently pay. (That would be Pfizer, as an example.  And, why is it corporations are allowed to do this- but not humans?)  These tax inversions are now subject to some new executive regulations.

But, my tax plan would relegate such shenanigans to the trash heap.  Because they would render them of no value whatsoever.  And, Europe and the developed nations of the world want to adopt a plan similar to mine.  Because it is not just from the IRS that these corporations are hoping to hide their dollars, but from every major country’s tax authorities.

Which is why the OECD (the Organization for Economic Cooperation and Development) has developed a plan akin to mine.  One they call BEPS.  Base Erosion and Profit Shifting.

I call my plan the Multi-Country Tax Compact.  Because it is based upon the Multistate Tax Compact that exists in the US- which ensures that each company pays its fair share of taxes to the various states where they have operations, sales, and assets.  This has been the practice for multi-state businesses for decades.

Basically, this tax program means the company computes the percentage of payroll (compared to all states), percentage of revenue (compared to all states), and percentage of real estate and other corporate assets rented or owned (compared to all states). This is then averaged to determine what percentage of the state tax rate is due. (If one operates in only one state, then it’s 100% for each of the three- or 100% of the state rate.)

The same concept should apply to worldwide entities. But, now instead of averaging the results for each state, we do so for each country.  And, that percentage is then applied to the appropriate national tax rate.  (If an entity operates in only one country, it would pay 100% of the appropriate national tax rate.)

I really don’t care if the plan is called MCTC or BEPS.  I only care that it’s implemented.  (According to the OECD that will happen sometime over the next two years or so.)  Because those funds will let us- and every other country in the world- maintain their infrastructure- and afford these same countries the ability to change personal tax rates- because the proportion of funds collected will afford each nation the ability to lower personal tax rates.

These new programs will ensure that more funds will be collected, and these new corporate tax collections will adjust  the ratio of funds contributed from 10, 45, 45 (business, poorer, top earners) to 25, 35, and 35-  with a bigger pie overall.

It’s way past time.