Global Tax Deal

Profit Shifting

4 Things to Know About the Global Tax Debate

The Biden administration has been supportive of the negotiations, but the changes should be reviewed in the context of recent policy changes in the U.S. and elsewhere, the general landscape of business taxation in the U.S., and potential challenges and risks arising from the global tax deal.

Why FDI Matters for U.S. Employment, Wages, and Productivity

Contrary to the Biden administration’s claims, raising taxes on cross-border investment would hurt U.S. economic growth and jobs. Research shows that FDI creates jobs in the U.S. and raises workers’ wages and productivity.

Foreign Direct Investment (FDI)

Time for an Updated Impact Assessment of the Global Tax Deal

Treasury Secretary Janet Yellen offered estimates from the EU Tax Observatory as evidence that the Polish government would benefit from supporting the global tax deal. Unfortunately, evidence was, at best, out of date.

Which Global Minimum Tax Will We Get?

Over the course of the last year, it has become clear that Democratic lawmakers want to change U.S. international tax rules. However, as proposals have been debated in recent months, there are clear divides between U.S. proposals and the global minimum tax rules.

Let’s Make a Global Tax Deal

Late last year, over 130 countries agreed to a global minimum tax, a purported end-all and be-all to the “race to the bottom.” But this policy is complex, and countries are already struggling to implement these new rules. We talk through how this policy came to be, identify where problems are beginning to arise, and dispel some common myths about this emerging new tax system.

Accounting for the Global Minimum Tax

Double taxation impacts the ability of companies to invest valuable things like improving their supply chains, developing new products, and hiring workers, and it can be fixed if the minimum tax uses a country’s own tax rate.

The Global Minimum Tax Changes the Game for Build Back Better Revenue

One goal for the Build Back Better Act has been to increase the amount of revenue the U.S. raises from U.S. companies at home or abroad. With the global minimum tax rules in play, it is likely that the expected gains to the U.S. Treasury from foreign profits of U.S. companies will diminish.

Rushing Headlong into Formulary Apportionment

Complex tax policies that work well “in theory” can often have a hard time when the rubber meets the road. One instance of this is the challenge that the OECD has created for itself with the global tax deal, also fondly known as Pillar 1 and Pillar 2.

OECD Pillar One

OECD Pillar Two (Global Minimum Tax)

U.S. Tax Incentives Could be Caught in the Global Minimum Tax Crossfire

The current prospect for the global minimum tax requires the attention of U.S. lawmakers. Otherwise, a tax benefit at home will just mean a tax increase abroad.

Gift or Lump of Coal: U.S. Cross-border Tax Changes Won’t Be Home for Christmas

As 2021 comes to a close, countries are moving toward harmonizing tax rules for multinationals, but stalled talks on the Build Back Better Act in the United States means new uncertainties for a global agreement and for taxpayers.

What Do Global Minimum Tax Rules Mean for Corporate Tax Policies?

The new OECD global minimum tax rules are complex, and some countries may opt to put them in place on top of preexisting rules for taxing multinational companies. However, countries should also consider ways to reform their existing rules in response to the minimum tax.

How Heavily Taxed Are U.S. Multinationals?

In general, the effective tax rates on the foreign profits of U.S. multinationals are not that low relative to the U.S. tax rate, contrary to popular rhetoric.

Choose Your Own Adventure: Global Minimum Tax Edition

Over the course of the last year, it has become clear that Democratic lawmakers want to change U.S. international tax rules. However, as proposals have surfaced in recent weeks, there are clear divides among various proposals.

Treasury Minimum Tax Argument Relies on Narrow Interpretation of Current/Proposed Rules

As Congress prepares to rewrite some portion of the current international tax rules, it’s hoped that they are able to achieve a more principled approach and one that is not so subject to obfuscation and misinterpretation.

Expense Allocation: A Hidden Tax on Domestic Activities and Foreign Profits

While arcane, expense allocation rules are relevant to current debates because they result in a heavier tax burden for U.S. companies under current law than the recently negotiated global minimum tax proposal.

Adoption of Global Minimum Tax Could Raise U.S. Revenue…or Not

This interaction between the U.S. proposals and those that may be put into law in foreign jurisdictions should give lawmakers caution when evaluating the revenue potential of changes to GILTI.