Yellen’s global tax race goes nowhere

Finance Minister Janet Yellen said her global corporate tax agreement was the end of the “race to the bottom” on revenue. Curiously, how US companies continue to perceive her plans as a race to the bottom of global competitiveness. Consider how corporate tax credits in the global deal could make America a big loser.

The mischief lurks in the plan to impose a global minimum corporate tax of 15%, the so-called Pillar 2 of the two-goal agenda negotiated at the Organization for Economic Cooperation and Development. (The first pillar is an excess profits tax aimed at technology and pharmaceutical companies.) The deal would allow governments to impose an “input” tax on companies operating in their jurisdictions. their tax rate if the company’s globally effective tax rate falls below 15% as calculated in the company’s home country.