Editor's note: John Gong is a professor at the University of International Business and Economics (UIBE) and a research fellow at the Academy of China Open Economy Studies at UIBE. The article reflects the author's opinions and not necessarily the views of CGTN.

Humans are social creatures. Unlike animals, we have a governance structure that has to be paid for by taxes. With globalization taking the world by storm in the last two decades, taxation is becoming increasingly global as well. For example, you can ship items in a container shipped around the world. Being subject to the same competitive forces, a poor guy in Youngstown, Ohio, lost his job because some multinationals moved their production line to where they can strike a better bargain.

As put by the U.S. Secretary of the Treasury Janet Yellen, the international taxation system has become a "global race to the bottom." By setting up excessively low corporate tax rates, countries like Ireland and a few Caribbean island countries have turned themselves into tax havens for corporations and rich individuals who are able to dodge hundreds of billion dollars of taxes while these countries create some GDP in the form of lawyer and accountant jobs and get a small cut out of the evaded windfall.  

The Organisation for Economic Co-operation and Development (OECD) has been working on an initiative for over a decade by now, trying to address this problem. Finally, there seems to be a light at the end of the tunnel. Amid the G7 summit in Cornwall in June, one thing they did right was to reach a consensus that a minimum tax for all nations is a rightful thing to do.  

The news said the G20 finance ministerial meeting had also voted yes. Then, in October, it will appear before the OECD in Paris, which represents 139 countries altogether. It looks like the proposal is likely to sail through OECD smoothly, and the 139 countries in the OECD would then need to enact their own laws through their respective legislative processes. All told, it is still a long march moving forward and probably will take another two to three years for the minimum tax to be in place for most countries in the world.  

The minimum tax is just one pillar of the global tax reform initiative. The other pillar regards the mechanism to ensure that the big tech companies pay income tax in the country where their product is consumed, not just where they establish headquarters. Spearheaded by the French government, the initiative targets big American tech companies, such as Google, Apple and Amazon, that derive sizable digital revenues in Europe but don't have to pay a dime of income tax there.    

These issues are, of course, long overdue. In the rat race to the bottom in taxation, major economies like China and the U.S. are in a disadvantageous position in that they cannot afford to compete with these smaller countries that are nimble enough to hash out these special deals. Large economies' tax policies tend to have broad macroeconomic implications and are usually constrained by fiscal obligations. As much as I advocate for low taxes in general, a 15 percent minimum tax isn't too much to ask for by any means. 

The digital age provides another reason a minimum tax is much warranted. See, in the winner-takes-all internet world, market power, and certainly money, is fast concentrated in a few companies' hands. That is why we are seeing the emergence of gigantic digital global behemoths in both China (Alibaba, Tencent, Baidu, Meituan, Xiaomi) and the U.S. (Google, Apple, Facebook, Amazon, Microsoft). These companies need to pay their fair share more, so that the government can have the resources to help those more in need and achieve what Chinese President Xi Jinping calls "common prosperity." 

Right now, the minimum tax is directed at closing the loopholes currently enjoyed by multinational corporations. Why not take a step further to include targeting rich individuals as well? That will be another step toward "common prosperity." 

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