#BlueStarBrief February 2022

This Month in the #BlueStarBrief
For our second #BlueStarBrief of the year, we're trying something new: two pieces, one from our US team and one from our French team, offering two perspectives on a shared issue. This month's topic is the OECD's 15% minimum corporate tax proposal,  and the legislative responses of the EU and US. You can send us your thoughts on this new approach through the "Send Feedback" link below - we look forward to hearing from you.

Here's what we have for you in this month's #BlueStarBrief:

US and EU Responses to the OECD's 15% Minimum Corporate Tax

Scenario Analysis for Hungary's Upcoming Elections

What We're Reading: Book Recommendations for Black History Month

The OECD's 15% Minimum Corporate Tax: The EU's Response

By: Mathilde DeFarges

For the better part of a decade, G20 countries have grappled with how to effectively adapt their tax systems to the global digital economy. As early as 2015, these countries, led by a vocal group of large European Union (EU) member states, asked the Organization for Economic Co-operation and Development (OECD) to come up with a plan to halt domestic tax base erosion and profit shifting due to mismatches between different tax systems. After years of stalling, the OECD process has produced an agreement that has been largely accepted around the world. However, several hurdles still need to be cleared before the agreement is adopted at the EU level and then fully transcribed into national laws of the Member-States of the EU.

Read about the road to the OECD proposal, as well as the challenges the proposal may still face, here.

The OECD's 15% Minimum Corporate Tax: The US' Response

In October 2021, 136 countries including the U.S. came together through the OECD and agreed to enforce a corporate tax rate of 15%, aiming to create a fairer system of taxing profits where they are earned.  For years, countries have been competing to house corporate headquarters because they promised jobs and investment, making it well worth the tax reductions offered.  But today’s digital powerhouses no longer offer jobs, investments, or even bricks and mortar.  Instead, they are moving to low tax jurisdictions to maximize profits.  The global minimum tax aims to halt forum shopping and tax avoidance.  

Reining in corporate forum shopping has shifted the domestic discussion here in the U.S., where the Institute of Taxation and Economic Policy reported that 55 profitable corporations paid NO federal income tax in 2020.  Moreover, while companies pay different amounts year-to-year, most companies pay far less than the current 21% corporate rate.  

Read about the efforts to implement the 15% tax in the US, and what it would mean for domestic corporations, here.

Scenario Analysis for Hungary's Upcoming Elections
By Kesarev, Guest Firm Contributor

Kesarev is a public affairs advisory firm with focus on Central and Eastern Europe.

In less than two months, Hungarians will go to the polls in the country's most open parliamentary elections since Prime Minister Viktor Orbán's ruling Fidesz-KDNP alliance received a supermajority in the Hungarian National Assembly in 2010. The upcoming vote is the toughest electoral challenge yet for Fidesz as – for the first time in nearly 12 years – Hungary's diverse multi-party opposition is running on a joint ticket and looking to unseat Orbán and install conservative small-town Mayor Péter Márki-Zay as Prime Minister.

With the opposition standing united, a change of government has increasingly become a possibility. Running a robust election campaign, however, Fidesz has managed to consolidate public support and remains the strong favourite to win the upcoming parliamentary vote, although most likely with an absolute majority instead of a constitutional one. At the same time, several other factors have the potential to impact the parliamentary elections, leaving multiple outcomes possible.

In this piece, Kesarev provides a brief overview of the election campaign, the state of the electoral race, the multiple scenarios for the parliamentary vote and the implications it holds for political stability.
Read it here.

Tips & Recommendations
At Blue Star Strategies we strongly believe that learning is a life-long commitment, and that reading is one of many valuable ways to maintain an open mind and deepen one's understanding of complex issues. Every February, the United States celebrates Black History Month, paying tribute to the generations of African Americans who struggled with adversity to achieve full citizenship in American society. In honor of Black History Month, this month's recommendations are two books from African American authors, covering how slavery has been central in shaping our nation's history and exploring why some believe that progress for some comes at the expense of others.
How the Word is Passed
By: Clint Smith

In How the Word is Passed, Clint Smith uses cities, events, and structures, from both our past and our present, to show how the way that stories are told and witnessed shape both our history and our present reality.
The Sum of Us
By: Heather McGhee

In The Sum of Us, Heather McGhee shows how racism hurts all Americans - and makes the powerful case that until we confront our history, we will continue to divide ourselves, rather than uniting against systemic harm.

Thank you for reading this month’s #BlueStarBrief!

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