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9. Combating Harmful International Tax Competition

Ending the Race to the Bottom and Ensuring Corporations Pay Their Fair Share Globally​

Harmful tax competition between nations—where countries deliberately lower corporate tax rates or offer excessive loopholes and incentives primarily to attract mobile investment—undermines the ability of all governments to raise necessary revenue for public services and creates a global "race to the bottom." This dynamic disproportionately benefits large multinational corporations, allowing them to minimize their tax obligations by shifting profits to low-tax jurisdictions (tax havens), while increasing the tax burden on workers and smaller domestic businesses. It also erodes national sovereignty by limiting governments' ability to set tax policies based on domestic needs.

Our platform advocates for strong U.S. leadership in international efforts to end harmful tax competition and establish a fair, stable, and equitable global tax system. Corporations must pay their fair share in the countries where they generate profits.

Key Strategies to Combat Harmful Tax Competition:​

  1. Implement and Strengthen the Global Minimum Corporate Tax:

    • Actively support and fully implement the OECD/G20 Inclusive Framework agreement on a global minimum corporate tax (Pillar Two). Ensure the U.S. domestic implementation (like the GILTI regime) aligns with and reinforces the global minimum tax floor (e.g., 15% or higher).
    • Work internationally to encourage broad adoption by all countries and resist efforts to weaken the agreement or create loopholes. Advocate for increasing the minimum rate over time.

  2. Combat Profit Shifting and Base Erosion:

    • Support international cooperation (e.g., through the OECD's BEPS project) to close loopholes that facilitate corporate profit shifting to low-tax jurisdictions. This includes strengthening rules on transfer pricing, limiting interest deductions, and addressing tax challenges arising from digitalization.
    • Implement strong domestic anti-inversion rules to prevent U.S. companies from relocating their headquarters on paper to avoid U.S. taxes.

  3. Increase Tax Transparency:

    • Advocate for global standards requiring multinational corporations to publicly disclose key financial information on a country-by-country basis (public CbCR), revealing where they generate profits and pay taxes.
    • Support international initiatives for the automatic exchange of tax information between countries to help tax authorities identify and combat cross-border tax evasion.
    • Crack down on the use of shell companies and anonymous ownership structures by implementing beneficial ownership registries.

  4. Re-evaluate Harmful Tax Incentives:

    • Critically review domestic tax incentives offered at the federal and state level to attract investment, ensuring they provide genuine public benefit and do not simply fuel a zero-sum competition between jurisdictions.
    • Work internationally to establish norms against particularly harmful or distortive tax incentives offered solely to lure mobile capital.

  5. Support Developing Countries:

    • Ensure that international tax reforms consider the specific needs and capacities of developing countries, providing them with technical assistance and a fair share of taxing rights to combat revenue losses from corporate tax avoidance.

Conclusion:​

Harmful tax competition benefits multinational corporations at the expense of public services and fair competition globally. The United States must lead international efforts to establish a level playing field, ensuring that corporations contribute equitably to the societies where they operate. By championing a robust global minimum tax, combating profit shifting, increasing transparency, and re-evaluating harmful incentives, we can create a fairer international tax system that supports public investment, reduces inequality, and strengthens democratic governance worldwide.