It is a good bet that this year’s US presidential election will be long remembered. Not only because it took days for the result to become clear, and because, for the first time, a woman, Kamala Harris , was elected vice-president. But also because the winner, Joe Biden, did something almost no other major presidential candidate has done on the campaign trail: he promised to raise taxes . Defying the certainty of those who insisted that this promise is the best way to lose an election, Biden committed to raising taxes on America’s richest corporations and on the 1 per cent. And he won. One can only hope this victory signals the acknowledgement by many Americans that decades of tax policies favouring the rich and powerful have resulted in billionaires now paying a lower effective tax rate than the working class, and in very high levels of wealth inequality – the highest levels since the administration started tracking that figure in the 1960s. This is not an American peculiarity. Over the past few decades, governments all over the world, influenced by corporate giants and the super-rich, have programmed their tax systems to prioritise the requests of the wealthiest over the needs of the rest of the population. This is how multinationals manage to declare their profits in tax havens in order to under-report how much they actually made in the countries where they do business – and consequently pay less tax than they should – and how most billionaires hide undeclared assets and incomes offshore, beyond the reach of the law. And let’s get this myth over and done with: tax abuse by the wealthiest is not marginal, nor it is necessary to keep the global economy running. A new report, “The State of Tax Justice 2020” , recently issued by Tax Justice Network, Public Services International and the Global Alliance for Tax Justice, estimates that the world is losing over US$427 billion in tax each year due to international tax abuse. Taxes the new battlefront amid push for Covid-19 recovery The pandemic has already killed more than 1.3 million people globally; the report also shows what tax abuse means concretely in terms of health spending of each country in the world. On average, countries are losing the equivalent of 9.2 per cent of their health budgets to tax havens every year. In the United States alone, this tax loss amounts to 5.8 per cent of the health budget. This is a scandal, when you consider the shortage of medical personnel and their exhaustion. But in lower-income countries, the situation is even more tragic, with losses to tax havens amounting to 52.4 per cent of their health budgets. Hong Kong is responsible for more than US$21 billion in lost taxes by other countries, which would pay the yearly salaries of nearly 1.7 million nurses, according to the report. The coronavirus pandemic reminds all governments, even the conservative ones, how essential public services are. They need to invest more in health, schools and infrastructure, but also in supporting businesses, especially the smallest ones. They must, therefore, turn to those who benefit from the system without contributing to it. One of the first moves should be to introduce progressive digital services taxes on the economic rents captured by multinational corporations in their sectors. Xi Jinping sends congratulations to US president-elect Joe Biden Ironically, the digital giants have also been the big winners of the Covid-19 crisis, since they don’t require face-to-face personal interaction. In addition, governments must also raise taxes on companies that are profiting from the crisis, such as pharmaceuticals, as well as companies in monopoly or oligopoly positions. Most importantly, governments must not give in to big companies’ claims that tax cuts are necessary for economic reconstruction. In normal times, a company does not invest in a country primarily because of low taxes: other important factors include the quality of the workforce and infrastructure, market access and political stability. In an uncertain investment environment, tax cuts will not promote private investment, but deprive governments of revenue. The Independent Commission for the Reform of International Corporate Taxation supports the introduction of a global minimum effective corporate tax rate of 25 per cent. Any multinational that books its profits in a tax haven would therefore be taxed in its home country up to this minimum rate. This would reduce its interest in transferring its profits to tax havens. The pressure in recent weeks to set this minimum rate at 12.5 per cent is purely irrational. This would push countries with higher rates to reduce them, further reducing their resources. With the Biden administration intending to increase the US corporate tax rate to 28 per cent and the global effective minimum corporate tax rate to 21 per cent, the European Union will have to set the bar high as well. Given the importance of these two markets, it would no longer be possible for any multinational company to avoid these levels of taxation. The 25 per cent rate can thus be established worldwide, giving states all over the world enough resources to rebuild societies and economies that are not only more prosperous and resilient, but also more equitable. José Antonio Ocampo is professor at Columbia University, and chair of the Independent Commission for the Reform of International Corporate Taxation (ICRICT). He is also a former finance minister of Colombia and executive secretary of the UN Economic Commission for Latin America and the Caribbean