To Limit Corporate Tax Avoidance, Tax Investors

Tax avoidance by corporations is on the agenda for this weekend’s meeting in Moscow of finance ministers from the Group of 20 advanced and emerging economies. It is a real problem, and its scale is getting difficult to ignore. The answer, though, isn’t further tax-code complication, as some governments favor, but a shift of taxes from profits to investment income.

To a comical degree, governments are of two minds when it comes to taxing profits. They have to do it, they say, for reasons of fairness and to meet their revenue needs. They deplore the aggressive efforts companies make to lighten the load. At the same time, governments write tax laws to attract multinational companies to their jurisdictions. That promotes the very tax arbitrage they abhor.