The Obama administration is pressuring the Abbott government to back away from plans to target American technology multinationals with higher taxes in next month’s federal budget.
The US Treasury’s top international tax official, Robert Stack, is also concerned about Australia forming an alliance with Britain and lining up US digital companies to be slugged with a so-called Google tax. The mooted changes would divert to Australia money that was potentially in line for US government coffers, triggering a cross-country fight over taxing rights.
Any additional tax that US firms get slugged for in Australia effectively becomes a transfer from the US treasury to the Australian treasury. So the Americans have woken up to the fact that Joe Hockey wants the US taxpayer to finance his budget deficit.
Spot the veiled threat:
“We understand that governments are under enormous pressure to raise revenue and it must be tempting to target non-residents,” Mr Stack said in an interview with The Australian Financial Review in his Washington office. “However, we hope and expect that all companies, including US companies, will be treated fairly and in accordance with international norms of taxation.”
Maybe those numpty know-nothing Senators who were verballing US corporations would like to summon Robert Stack to address them, so they can try bully him. Even better why don’t they go to Washington and explain to the US Congress why the US taxpayer should transfer their hard-earned to the Australian government.
Update: Another way of looking at this is to argue that while the Australian government is complaining that US MNCs are eroding the Australian corporate tax base, the Americans are now complaining that Australia is eroding the US corporate tax base.