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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The writer is Norway’s minister of finance
Governments around the world are grappling with the challenge of designing tax systems that promote economic competitiveness and environmental sustainability while generating sufficient revenues. One historical figure whose ideas on taxation remain relevant today is 19th-century American economist Henry George.
George’s concept of taxing land rent to benefit society as a whole, rather than just landowners, is particularly pertinent in today’s tax discourse. His advocacy for a single land rent tax as a replacement for all other taxes sparked debate and intrigue during his time.
Norway, a nation known for its natural resource wealth, has long embraced the idea of ensuring that profits from these resources benefit the entire society. This principle has guided Norwegian energy policy, particularly in the regulation of hydropower and oil production in the North Sea.
As the global economy evolves, the issue of taxing super-profits generated by multinational corporations becomes increasingly complex. George’s emphasis on fair redistribution of value from specific land chunks can be applied metaphorically to the modern challenge of taxing intangible assets and global value chains.
International tax cooperation is crucial in addressing the taxation of super-profits in a globalized and digitized world. Initiatives like the OECD and G20 Inclusive Framework on Base Erosion and Profit Shifting are paving the way for more equitable taxation of multinational companies.
While George’s singular tax proposal may not directly apply to today’s multinational corporations, his underlying principle of ensuring that super-profits benefit society remains relevant. International tax cooperation, exemplified by the global minimum tax initiative, is essential in achieving this goal.
In conclusion, George’s timeless ideas serve as a reminder that governments have a responsibility to ensure that super-profits contribute to the well-being of their citizens. Through international tax cooperation, we can strive towards a fairer and more sustainable tax system for the benefit of all.