Deric Cheng

I think it seems relatively uncontroversial to recognize that if the economy shifts the way that it captures value 20%,

from labor to capital significantly that we should think about, at the very least, how to redesign our taxation mechanisms to account for that.

And the project that I'm most working on right now is kind of the idea of a progressive income tax.

Essentially, what that...

What that is intended to respond to is the idea that there might be unprecedented shift from labor to capital income, which could drastically shift the overall tax base.

And two, that there could be a massive increase in the concentration of profits and economic growth.

And so a progressive corporate...

Profit tax would help to respond to that by capturing more value from the largest corporations as opposed to smaller mom and pop stores, and also capturing more relative profit from capital as opposed to labor.

Whereas right now, our labor taxes are...

on the orders of 20 to 40%, right?

They are already progressive and they are significantly higher than capital taxation, which broadly sits roughly around 20% in the US.

And so when a lot of value, if a lot of value shifts from labor to capital, how do you make up that 20% gap?

A progressive corporate income tax could be one step in that direction as an example.

Yeah, this is speaking to a really broad and persistent problem with global taxation.

And this is essentially the issues with tax havens, with the race to the bottom with corporate taxation that has been going on for the past 20 years.

When you've heard about stories such as Apple paying $0 in corporate profit taxes, probably about a decade ago, it's changed since then.

It's related to all of that.

And I would say the most promising structure and solution has to do with

The OECD, which has proposed a thing called the BEPS 2.0, base erosion profit shifting, which essentially allows for global tax coordination across a wide, almost every country involved in the taxation of multinational enterprises such as Google and Apple.

It is currently somewhat stalled, but I do believe that it seems to be the most reasonable and practical solution that will help to avoid this race to the bottom that we've seen over the past two decades.