If Europe is worried, we should be terrified.

Republicans in the US Congress are racing to pass a tax reform bill ahead of the Christmas break that will reduce corporate tax rate from 35% as at present to a new rate of 21%. Top rate on individual income tax will come down from 39.5% to 37%, estate tax will be reduced and tax relief for interest on mortgage will be capped. Republicans hope to pass the bill by Wednesday next week but they may struggle to get the required numbers in the Senate. The top 5 economies in Europe have warned the US about effects on international tax treaties. "The inclusion of certain conventional international tax provisions could contravene the US's double taxation treaties and may risk having a distortive impact on international trade," they wrote in a letter. Europe is worried about the Base Erosion and Anti-Abuse Tax provision in the Senate Bill which seeks to shop 'tax shopping', in which multinationals shift their registered office to a country with very low tax rate in a process known as 'inversion'. Ireland has a corporate tax rate of 12.5%. In a 'sweetheart deal' with Ireland Apple reduced its tax liability to almost zero, earning the wrath of the EU Commission which ordered Apple to pay 13 billion Euros, or $14.5 billion, to Ireland in back taxes. Both Ireland and Apple are appealing the decision. Apple is a US company but pays virtually no tax in the US so if it starts paying taxes in the US then Europe could get less. While warning the US about wanting to increase tax collections the EU has published a blacklist of tax havens presumably as warning that if they continue to assist in tax avoidance sanctions will follow. The European Central Bank cut interest rate to negative in 2014, in an effort to force people to spend and reduce the exchange rate of the Euro to increase exports. India charges 30% corporate tax for Indian companies with a surcharge of 7-10%, depending on income, and 3% cess. For foreign companies tax is at 40%, with surcharge of 2-5% and cess of 3%. Companies will prefer to pay the lower tax rate in the US and if India levies its own taxes our companies will be priced out of the market, wrote D Kanabar. Instead of exporting textile imports have jumped. India should also lower corporate tax rates to be competitive and help our companies, wrote H Ramakrishnan. But, how? Indian politician freely dish out taxpayer money to win elections. Rs 110 billion was showered on Gujarat to bribe voters before assembly elections and Rs 100 billion have been promised to universities in Bihar to reward the Chief Minister for ditching the RJD of Lalu Prasad in favor of the BJP of the Prime Minister. Tax terrorism can never disappear from India. We have to wait till the economy tanks.