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1 Daniel Bunn, A Global Minimum Tax and Cross-Border Investment: Risks & Solutions 1 (2021)

handle is hein.taxfoundation/glmmtxa0001 and id is 1 raw text is: A Global Minimum Tax *9 and Cross-Border Investment: Risks & Solutions FI SCAL Daniel Bunn Vice President of Global Projects FACT No. 769 June 2021 Key Findings The political effort to address profit shifting and limit the benefits of using low-tax jurisdictions to facilitate cross-border investment has focused on adopting a global minimum tax applicable to large multinational corporations. While a global minimum tax could act as a backstop to current corporate tax rules, it would also increase the tax burden on business investment across the world. The experience of U.S. companies following the elimination of a tax benefit connected to Puerto Rico shows that policies that increase the taxes owed on offshore operations can have negative blowback effects on domestic markets. Because foreign direct investment (FDI) is sensitive to tax rates, a global minimum tax would directly impact investment decisions of multinational companies. To mitigate the negative economic effects of a global minimum tax, policymakers should ensure that both the minimum rate and the tax base to which it applies are designed in a way that does not distort investment decisions but still acts as a backstop to current corporate tax rules. The Tax Foundation is the nation's leading independent tax policy research organization. Since 1937, our research, analysis, and experts have informed smarter tax policy at the federal, state, and global levels. We are a 501(c)(3) nonprofit organization. ©2021 Tax Foundation Distributed under Creative Commons CC-BY-NC 4.0 Editor, Rachel Shuster Designer, Dan Carvajal Tax Foundation 1325 G Street, NW, Suite 950 Washington, DC 20005 202.464.6200 taxfoundation.org