Oh, they’re talking.   No, I don’t mean the Republicans and Democrats in Congress.  (Though that would be really nice.)

No, it’s 50 country tax administrators around the globe.  They are worried how they can prevent all this tax avoidance that the multinationals have been perpetrating upon the citizens of the world.  After all, the multinationals spend tons of bucks on smart lawyers and financial gurus to stay one step (or even a half step) above the regulations.

So, now these countries are looking at the myriads of tax treaties that have spanned the globe since the Depression.  The goal then was to ensure that company profits would not be taxed twice- or more than that- by the various countries these firms touch.

But, as I said, the companies have had a century to figure out how to screw the governments and play the old shell game.  This game moves profits from where they really are developed to jurisdictions with the lowest tax rates.

So, the OECD (Organization for Economic Cooperation and Development) plans to hit up the finance ministers of the G20 (the 20 countries with the largest economies in the world) this month.  Then, those finance ministers are going to have to convince their governments to approve the deal.   The OECD plan will have corporations pay their taxes where their profits are generated.

That’s been the problem.  As I said above, proving where profits are generated is the game the companies are much smarter ay playing than are our governments.  Like claiming the new product just developed in Silicon Valley is a licensee of some podunk nation in the middle of nowhere.  (Apple does this  with Ireland, which provides a sweetheart deal for Apple’s non-taxes.)

And, right now, corporations are shunning their obligations for at least $ 200 billion in taxes each year.  That’s not chicken feed.   The various shortfalls turn out to be about 0.6% of our GDP (along with those of the biggest world economies), and about 1.75% for those developing nations around the globe.

The OECD expects their new program will correct this.  Officially, the system they propose is called BEPS- Base Erosion and Profit Sharing.   BEPS will have each company declare the revenue, profit, employment, capital, and assets within each jurisdiction it operates.  This will set the amount of taxes paid in each location around the globe.

Sounds just like the program I’ve been advocating for three years now.  Mine is modeled after the Multistate Tax Compact that obtains in the US.  Except, that program needs to be applied worldwide.

I’m glad the world is adopting such a program.  Because each country where citizens help a company generate its profits is entitled to a fair share of those profits; those taxes recompense the nation for the costs of providing the services upon which the corporations rely.

Tomorrow, I’ll explain how the program should work in the States.