Evaluating Minimum Taxation
Minimum tax rules constrain only the lowest-tax jurisdictions. Because higher minimum tax rates expand the circle of affected countries and therefore the impact of any further changes, there can be dominated regions over which no parameter values would make a minimum tax efficient. Applying a Taylor approximation to the distribution of statutory corporate tax rates in 2020, the range 4%-27% is a dominated region: there may be an efficient minimum rate below 4%, or higher than 27%, but there is no efficient world minimum tax rate between 4% and 27%. Minimum taxes set at popular rates are particularly inefficient – a minimum tax rate of 15% yields value that, when positive, is equivalent to offsetting less than one percent of the effect of tax competition.
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