Pillar Two, the international global minimum tax agreement, has a considerable chance of failing and may ultimately allow the same problems it was designed to address.6 min read
Alan Cole is a Senior Economist with Tax Foundation’s Center for Federal Tax Policy. His areas of focus include business taxes, cross-border taxes, and macroeconomics.
In addition to work at Tax Foundation, Alan Cole has served on the Joint Economic Committee and with The Conference Board, and published on a variety of economic topics. Alan has a bachelor’s degree in economics from Yale University and an MBA majoring in finance and public policy from the Wharton School. Alan lives in Washington, D.C., with his wife and daughter.
The Tax Cuts and Jobs Act of 2017 (TCJA) reformed the U.S. system for taxing international corporate income. Understanding the impact of TCJA’s international provisions thus far can help lawmakers consider how to approach international tax policy in the coming years.30 min read
At first glance, a ruling for the plaintiffs in Moore might seem to solve some of the timing problems with the U.S. tax system. Unfortunately, upon greater inspection, such a ruling might create new timing problems. And the more rigid the ruling, the harder it would be to fix the timing problems it would create.5 min read
The global minimum tax agreement known as Pillar Two is intended to curb profit shifting. However, OECD countries already have a variety of mechanisms in place that seek to prevent base erosion and profit shifting by multinational corporations.40 min read
Congress should recognize that Pillar Two has significant U.S.-specific downsides, but also that it cannot unilaterally stop Pillar Two from taking effect. Instead, it should carefully consider a policy response for the next Congress, when a variety of forces are likely to compel it to act.7 min read
A major case pending before the U.S. Supreme Court (Moore v. United States) is calling into question provisions on large portions of the U.S. tax base which could quickly become legally uncertain, putting significant revenue at stake.7 min read
A growing international tax agreement known as Pillar Two presents two new threats to the U.S. tax base: potential lost revenue and limitations on Congress’s ability to set its own tax policy.39 min read
The JCT analysis raises some useful questions for the U.S. domestic debate over Pillar Two. The Treasury Department should examine its support for an agreement that will reduce its own revenue intake. But it is also worth noting that the principal mechanism for the revenue reduction—the foreign tax credit—is a policy already baked into U.S. law, including the Republican-enacted global minimum tax from 2017. The OECD deal merely takes advantage of this longstanding feature.6 min read
As the UTPR is a new concept, it is worth explaining what it is and why Rep. Smith cares about it. In a sentence, the Undertaxed Profits Rule (UTPR) is a looming extraterritorial enforcement mechanism for a tax base the U.S. has not adopted.6 min read
One of the arguments in favor of the FairTax is that it would do a better job of taxing the underground economy than the income tax it is intended to replace.6 min read
Real tax reform should boost incomes for all. A corporate income tax cut could be a means to do that, but not if it’s temporary. A temporary cut is less likely to promote growth and less likely to benefit American workers.14 min read
Interest deductibility creates holes in the tax base, distorts corporate investment strategies, and contributes to a potentially dangerous macroeconomic environment of overleveraging.20 min read