Trump’s tax policy slows progress toward fairness in international taxation

In his return to the presidency of the United States, Donald Trump has lashed out against international taxation and announced the country’s disengagement from the Global Tax Agreement promoted by the OECD, which proposes a minimum tax of 15% for companies with revenues over USD $800 million.

In his presidential order, Trump made it clear that the international tax agreement has no legal effect in the United States, as it has not been ratified by Congress, unlike regions such as the European Union and the United Kingdom, which have adopted it.

According to the US president, this agreement limits US tax sovereignty and exposes its companies to international risks, such as tax retaliation.

In addition, it ordered an investigation into possible violations of tax treaties or discriminatory regulations against U.S. companies, with the objective of implementing countermeasures to protect national interests, which distances the United States from the possibilities of consensus on international taxation.

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Trump’s policy will be a barrier against inequality reduction.

In the context of reduced commitment to international taxation, progress in the struggle to adopt global measures to reduce inequality faces a new landscape. For example, the proposal for a global tax on the super-rich, pushed by Brazil at the G20, will remain on hold.

This is worrying because in recent years a harsh reality for Latin America has become evident: of the thousands of people in the world who have fortunes in excess of US$1 billion, only 121 are in the region, according to Oxfam figures.

This not only reflects the low concentration of large fortunes, but also the profound inequalities in income and wealth both between Latin America and the global north and within the countries of the region themselves.

While in countries such as the United States or Europe the number of billionaires is growing rapidly, Latin America, despite being a region rich in natural resources and with 90% of the labor force that drives the global economy, barely generates super-rich.

In the region, most billionaires are concentrated mainly in Brazil, Mexico, Argentina, Chile and some isolated cases in nations such as Colombia or Venezuela.

According to the NGO, the global wealth of billionaires grew by USD $2 trillion in 2024, while poverty has hardly been reduced since 1990.

For Latin America, the gaps are more alarming: wages in the global south, where Latin America is located, are between 87% and 95% lower than in the north. Moreover, the region receives only 21% of global income, despite providing much of the world’s raw materials and labor force.

Inequality is not only evident in terms of income, but also in living conditions. For example, in Africa (which shares similar characteristics of inequality with Latin America), life expectancy is 15 years lower than in Europe.

Likewise, women and migrant workers, especially female migrants, suffer the most from job insecurity, with wage gaps of up to 21% with respect to national men. All these factors justify the need for international tax reform agreements.

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Latin America between international taxation and fiscal policy

In Latin America, current fiscal policies perpetuate these inequalities. Sixty percent of tax revenues come from indirect (regressive) taxes such as VAT, which disproportionately affects the poorest.

Moreover, according to Oxfam, only four countries in the region tax wealth, leaving out of taxation real estate, inheritance and financial wealth that is often undervalued or transferred to tax havens.

Although a 2% global tax on the super-rich could be a step towards tax justice, in Latin America its impact would be limited: only the richest 121 people would be taxed, concentrated mainly in Brazil.

This highlights the structural inequality of the region and the urgent need for progressive tax systems that not only tax large fortunes, but also combat tax evasion and fraud, estimated by ECLAC at USD $430 billion annually for the region and more than $80 trillion pesos annually for Colombia, according to the DIAN.

While the richest countries continue to accumulate wealth and power, Latin America faces a historic challenge: to break with an economic system that has marginalized the majority and build a more equitable model to reduce inequality and improve the living conditions of its population.

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