In the ZEW model, U.S. firms needed a return of around 7.6% for an investment to be profitable under pre-reform tax law, compared to an EU average of 6%, and 5.7% in low-tax Ireland.
.. Call it the Get Germany to Pay for American Jobs Act. Don’t be surprised if Germany, France and other high-tax countries follow the U.S. down the corporate Laffer Curve.
European Finance Chiefs Hit Out at U.S. Tax Plans
the BDI Federation of German Industry, Germany’s most influential business lobby, warned some provisions of the bills ostensibly aimed at curbing corporate tax avoidance had “clearly a protectionist character.”
.. The ministers took specific issue with provisions in both the House and Senate versions of the tax bill, including proposed excise-tax payments to foreign-affiliated firms in the House version. They also cited a “base erosion” provision in the Senate version that would add tax to cross-border financial transactions.
.. Mr. Liguori said software makers like SAP SE, based in Germany, could also get hit... the reform would leave U.S. businesses facing lower domestic-tax rates than some of their European peers, putting governments under pressure to reciprocate.
.. For years, European governments and the U.S. have sought to combat beggar-thy-neighbor corporate tax policies.. A provision of the House bill for a 20% excise tax on payments to foreign-affiliated companies, the Europeans warned, would discriminate against non-U.S. businesses operating in the country, contravene World Trade Organization rules and breach double-taxation agreements... the proposed “base erosion and anti-abuse tax provision” contained in the Senate bill could harm international banking and insurance businesses because it would treat cross-border financial transactions between a company and a subsidiary as nondeductible, subjecting it to a 10% tax,
WWI: U.S. Enters the War: What Changed
Despite the U.S. position, many Americans personally sympathized with Britain, France, and their allies. American institutions lent large sums to the Allied governments, giving the U.S. a financial stake in the outcome of the war. Nearly 10% of Americans identified as ethnic Germans, most of whom hoped the United States would remain neutral in the war.
What Changed?
In November of 1916, President Woodrow Wilson won a close re-election under the slogan “He Kept Us Out of War.” Yet in early 1917 when Russia’s internal political revolutions effectively took them out of the war against Germany, the prospects for the Allies darkened. Already receiving massive shipments of supplies and a near limitless line of credit from the U.S., the Allies needed reinforcements.
When easing Eastern military pressures made more forces available for their Western Front, Germany sensed the tide was turning. To capitalize on the shift, German leaders agreed in January of 1917 to resume unrestricted submarine warfare to break the devastating army stalemate in Europe and the British navy’s successful blockade of critical German supply ports. This pushed American public opinion toward intervention.
.. Germany’s unrestricted submarine warfare strategy sent more merchant and passenger ships to the ocean’s floor and the loss of American lives mounted. The U.S. protested and in February severed diplomatic relations with Germany, while Congress appropriated funds for increased military affairs.About the same time, British cryptographers intercepted and began deciphering Germany’s “Zimmermann Telegram” offering U.S. territory to Mexico in return for joining the German cause. Though Mexico declaring war was not perceived as an imminent threat by the American public, sensational headlines trumpeted each new development as one of history’s most influential acts of codebreaking played out. Across the nation, support grew for intervention.On March 20, almost a month after the Zimmerman Telegram hit the American press, President Wilson convened the Cabinet to discuss moving from a policy of armed neutrality to war. It was unanimous: all members advised war. With a proclamation already being drafted by President Wilson, the American steamship Aztec was torpedoed and sunk by Germany on April 1.
On April 2, President Wilson asked Congress to declare war against Germany specifically citing Germany’s renewed submarine policy as “a war against mankind. It is a war against all nations.” He also spoke about German spying inside the U.S. and the treachery of the Zimmermann Telegram. Wilson urged that “the world must be made safe for democracy.”
Angela Merkel’s Failure May Be Just What Europe Needs
For all the understandable talk about the crisis of Western liberalism, the political chaos of the last few years has also demonstrated that many supposed agents of post-liberalism are unready to really push the liberal order to the breaking point.
President Trump is a political weakling, not a Caesar; Marine Le Pen can’t break 35 percent of France’s presidential vote; the Islamic State has all-but-fallen.
.. Dougherty has been circulating in high-level confabs since Trump’s election and reports a persistent mood of entitlement and ’90s nostalgia — a refusal to take responsibility for foreign policy failures, to admit that post-national utopianism was oversold, to reckon with the social decay and spiritual crisis shadowing the cosmopolitan dream.
.. Indeed, all the high-level agita surrounding Germany’s political crisis — good heavens, not a minority government! — suggests a basic deficiency of elite imagination that will be one of the things that brings down the liberal order if it does eventually fall.
.. Better that kind of crisis-generating move by far, in fact, than a grand coalition of parties united only in their anti-populism, and perfectly designed to ratify the populist critique that all the elites are in cahoots.
What will save the liberal order, if it is to be saved, will be the successful integration of concerns that its leaders have dismissed or ignored back into normal political debate, an end to what Josh Barro of Business Insider has called “no-choice politics,” in which genuine ideological pluralism is something to be smothered with a pillow.
.. In Angela Merkel’s Europe right now, that should mean making peace with Brexit, ceasing to pursue ever further political centralization by undemocratic means, breaking up the ’60s-era intellectual cartels that control the commanding heights of culture, creating space for religious resistance to the lure of nihilism and suicide — and accepting that the days of immigration open doors are over, and the careful management of migrant flows is a central challenge for statesmen going forward.