Thread by @FACTCoalition

For all of its benefits, the #InflationReductionAct missed🔑fixes to more definitively remove the incentive for large multinationals to shift profits offshore or erode the U.S. tax base. The U.S. must continue to prioritize int'l tax reform...🧵1/15
thefactcoalition.org/inflation-redu…

The #InflationReductionAct included a 15% corporate alternative minimum tax (CAMT) for the world's largest corporations. However, CAMT is not the 15% global minimum corporate tax agreed to by 137 jurisdictions at the OECD in October 2021 (Pillar 2). 2/
oecd.org/tax/beps/oecd-…

Unlike Pillar 2, CAMT doesn't apply on a country-by-country basis. Instead, CAMT requires an average global tax rate equal to 15%. This ⬆️ incentive to shift profits into tax havens and investments away from the 🇺🇸, which has a statutory 21% corp. rate. 3/
papers.ssrn.com/sol3/papers.cf…

CAMT will also apply to fewer companies. CAMT only applies to U.S. co's earning more than $1 billion in average annual income, or foreign co's earning more than $100 million in average annual income (💸💸). Finally, certain tax "incentives" are treated differently under CAMT. 4/

Yet, CAMT does build off (and complement) an earlier avg. offshore minimum tax in the U.S. from 2017-the ~10.5% global intangible low-taxed income (GILTI) tax- to create a higher int'l and domestic corp. minimum tax that should not be seen as a complete rejection of Pillar 2. 5/

For more on the interactions between CAMT and the OECD agreement, including on why CAMT might still be seen as a (incomplete) step forward by the U.S., this article is a great starting point....👇6/
taxnotes.com/featured-analy…

What does this mean for Pillar 2? Well, other countries in the world are still moving forward with Pillar 2 (latest👇)...7/

news.bloombergtax.com/daily-tax-repo…

pwc.com/us/en/services…

Cleverly, Pillar 2 works by allowing participating countries to "top-up" undertaxed global profits of big multinationals--even if booked or shifted into non-participating countries. If just a few key countries adopt Pillar 2, there is no competitive advantage to holding out. 8/

This means that the 🇺🇸 may simply be forfeiting corp. tax revenues if it doesn't eventually adopt Pillar 2 reforms (starting with reforms to apply GILTI on a country-by-country basis at 15% that were in Build Back Better). That's bad policy. 9/

🇺🇸 co's should encourage Pillar 2 reforms more than ever. Pillar 2 will apply to 🇺🇸 co's, regardless of whether the U.S. adopts Pillar 2. B/w CAMT, Pillar 2, GILTI, + the base erosion and anti-abuse tax (or BEAT), 🇺🇸 co's may be facing 4+ global min. taxes, w/ clear losers 10/

Further, multilateral tax efforts represent an opportunity, not just for better global tax policy, but to further global democracy. In turn, this may better advance solutions to global challenges, such as climate change...11/
foreignaffairs.com/united-states/…

This also includes fighting the corruption and anti-democratic policies that are often exacerbated by politically and financially entrenching tax havens and tax dodging--state sanctioned application of a different set of rules for those who "have" and those who "have not." 12/

Following the #InflationReductionAct, the FACT Coalition urges the U.S. to not give up on multilateral international tax reform, and to urgently do the following:
1. permanently end tax dodging through profit shifting and base-erosion practices by multinationals; 13/

2. create more stable tax policy for businesses and a level playing field regardless of location of headquarters, operations, or profits being booked–decreasing the incentive to engage in tax competition by global governments; and 14/

3. advance multilateral global solutions to the world’s most pressing challenges, including threats to global democracy and climate change, including by furthering the OECD agreement and improving the OECD process to better incorporate concerns of developing nations.
15/15 END.