A Republican win is bad news for tax reform

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The Republicans won the US mid-term elections. As Gary Younge in the Guardian points out, not by much, but by enough to mean that they control both Houses in Congress for the first time since 2006. Unlike then though they do not also have the Presidency, and a Senate majority of two is not enough, given the lack of whipping in that House, to mean they will always get their way.

But this matters. The Republicans have proved themselves economically bizarre on many issues. Their views on tax havens are unpalatable to most of the world now. They seek balanced budgets (not that they have delivered them in living memory). Their views on corporation tax reform heed the interests of corporations, not ordinary US voters. Their attitude to the role of the government they are so keen to control beggar's belief on many occasions. I will ignore other issues.

And this matters: they can block progress on implementation of the OECD Base Erosion and Profit Shifting process, for example.

And they could now seek to prevent implementation of the US version of country-by-country reporting for the extractive industries.

At the same time they could block moves to reform the absurd US corporation tax system.

And do not expect ordinary Americans to see them promoting tax favours for their benefit: the GOP has a history of delivering them for the few and not the many.

President Obama stands in the way of some of these issues for the net two years, and he can still take executive action, as he did on tax inversions when Republicans block necessary measures. But the fact is that a spanner has been thrown in the works and the focus on the next Presidential election becomes more intense if the hopes of real international tax reform are to be fulfilled.


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