It’s not exactly a phrase that makes the heart beat faster—“corporate income tax.” But suddenly it’s a hot topic. President Biden is proposing a hefty increase in the U.S. rate, and the OECD is trying to herd 139 countries into agreeing on a global minimum corporate tax. Why? In a digital economy based on services and intellectual property, multinational companies can easily and legally shift profits into low-tax or no-tax jurisdictions.
The result is a global competition that’s been pushing rates down for 40 years. Only the U.S. has a minimum tax, enacted in 2017.
The Biden administration wants the OECD group to get on board, leaving fewer options for profit-shifting.
The figures in the map above are OECD calculations of effective tax rates—the total tax burden companies face, accounting for rates as well as for other tax rules in each country, on average. Of course, the rates don’t reflect what companies actually pay. Every year, many large, profitable American corporations game the system to avoid paying any U.S. income tax at all.
This article appears in the June/July 2021 issue of Fortune with the headline, “Biden vs. the world on taxes.”
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