Time to fix the way governments tax multinational companies
The answer lies in reducing incentives to shift profits to havens
![](https://www.economist.com/cdn-cgi/image/width=1424,quality=80,format=auto/sites/default/files/images/2021/05/articles/main/20210515_ldp503.jpg)
TAX COMPANIES too much, and growth will shrivel. Tax them too little, and resentment will soar. The public and politicians in Western countries have long thought the treatment of multinationals falls too close to that second extreme. Now the system is reaching breaking-point. Over 40 countries are squabbling over how to impose levies on Silicon Valley firms. Meanwhile the pandemic is forcing governments to find ways to plug their fiscal deficits, not least the Biden administration, which wants to increase multinationals’ tax rate.
This article appeared in the Leaders section of the print edition under the headline “End the contortions”
Leaders May 15th 2021
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