Americans for Tax Reform Foundation and the Taxpayer Protection Alliance led a coalition of 23 groups that oppose any attempts by the OECD to curb international tax competition and impose a de facto global minimum tax. 

See the letter below and linked to here


December 16, 2020

We, the undersigned 23 organizations, representing taxpayers and consumers across the globe, strongly urge you to oppose any and all attempts to curb international tax competition and impose a de facto global minimal corporate tax through the Organization for Economic Co-operation and Development’s (OECD) “Two-Pillar Approach to Address the Tax Challenges Arising from the Digitalization of the Economy.” If enacted, these proposals, which run counter to the OECD’s own advocacy of more efficient tax systems with lower corporate tax rates, would undermine economic sovereignty of nation-states, disproportionally hurt smaller economies, and hinder opportunities for companies to innovate and invest in research and development. It would also prevent developing countries from pursuing policies to boost their economies and lift people out of poverty. In addition, as the world struggles with an international recession due to the impact of Covid-19, increasing the tax burden would significantly prevent nation-states’ abilities to enact pro-growth policies to stimulate and help rebuild their economics. Now more than ever countries need to reduce the tax burden to allow for rapid economic growth and increases in employment, whereas these proposals would do the exact opposite.

The OECD proposals mainly consist of two pillars, which, combined, are estimated to increase global tax revenue by $100 billion US annually. Pillar I covers the reallocation of taxing rights across jurisdictions, and while initially designed to cover digital companies, appears to have significantly expanded to apply to other industries. Pillar II is the specific creation of a global minimum tax on corporate profits. Combined, these two proposals would represent a significant rearrangement of the international corporate tax system, while representing a shift in funds from open economies to countries with large degrees of corruption, state intervention, and violations of human rights such as China, Russia, and Argentina, which, while not members of the OECD, are part of the broader Framework “Base Erosion and Profit Shifting” (BEPS).


The entire premise of this two-pillar approach is based on a fundamentally flawed and deeply misguided understanding of international tax competition which posits that tax competition forces rates below optimal levels. The reality, however, is quite the opposite. Per the nonpartisan Tax Foundation: “Tax competition can help to keep taxes closer to their optimal level, constraining wasteful government excess. Taxes will not be driven to zero through competition, as moving capital and labor abroad does come at a cost.” As such, international tax competition is vital for the continuance of a vibrant and dynamic international economy, and in ensuring efficient levels of taxation across member states. Different countries have different approaches to vitalize their economies. Tax competition for countries such as Ireland and Luxembourg is key to their economic strategy and success and applies much-needed pressure to certain high tax countries like Germany and France. This healthy process of tax competition will be minimized if not eliminated following the OECD’s approach. 


Despite rhetoric on how tax harmonization as envisaged under these two pillars would create a “level playing field,” this proposal would significantly hurt smaller countries, which do not have the intrinsic advantages and economies of scale that comes with larger population bases. Lower corporate tax rates are the only way in which such nations are able to overcome their competitive disadvantage caused by their smaller size and attract vital investment and compete against countries with larger capital markets. For this reason, high tax jurisdictions are primarily large countries, whereas low taxing jurisdictions are almost exclusively small and open economies. Through the imposition of such a regime, investment would be directed away from smaller countries who will therefore be placed at a considerable relative disadvantage as, in the words of The European Centre for International Political Economy, “the shift in effective taxing powers would undermine small countries’ attractiveness to international businesses and, in addition, induce domestic businesses to relocate to larger countries with the economic gravity of larger market.”


In addition to unfairly targeting smaller economies, these proposals would also seriously jeopardize the opportunities for developing countries to pursue a pro-growth agenda and boost their economies, thereby depriving them of the opportunity to increase economic growth and therefore improve living conditions. As the OECD recognizes, “research that compares the experiences of a wide range of developing countries finds consistently strong evidence that rapid and sustained growth is the single most important way to reduce poverty. A typical estimate from these cross-country studies is that a 10 per cent increase in a country’s average income will reduce the poverty rate by between 20 and 30 per cent.” Given that, as noted once again by the Tax Foundation, “Cutting corporate tax rates leads to increased investment, productivity gains, and, in turn, increased economic growth, output, and higher standards of living,” any policy that would hinder developing countries ability to enact such policies would effectively entrench the dominance of highly developed economies and would have significantly greater effects than any additional revenue benefits the OECD posits developing nations may achieve through attempts to limit “profit shifting” under Pillar II. It is noted that the BEPS framework includes 135 countries, and is not limited to OECD members, and as such many will be impacted by this through pressure brought upon them by the OECD. In addition, poorer OECD member states, such as Poland which has a GDP per capita three times lower than richer nation-states such as Germany, would similarly be negatively affected. Doing so is a highly immoral approach and one that would lead to significant levels of poverty that would otherwise be ameliorated. By preventing developing countries from pursuing policies to lift them out of poverty, and put them closer to parity with wealthier nations, these proposals would continue to perpetuate global inequality and further entrench the “north-south” divide.  


Furthermore, it is noted that ultimately corporations don’t pay tax, individuals do. Taxes will ultimately be passed down to the consumer level, harming individuals in addition to depressing economic growth further through higher costs leading to lower demand. Similarly, increases in tax rates will also hurt individuals who rely on dividends for retirement savings, with particularly devastating consequences given current global economic uncertainty. 


In conclusion, the foundational principles of both Pillar I and Pillar II are based on a fundamental misunderstanding of the operations of international tax competition, and the benefits it brings in ensuring optimal levels of taxation. Not only do these proposals undermine fundamental principles of democratic sovereignty and accountability in member states, through the effective transfer of taxation power from elected legislatures to unelected bureaucracies, but they would also have little impact on their stated goals of improving the global allocation of capital. More disturbingly, these proposals would also have severe negative unintended consequences harming smaller economies and preventing developing countries from boosting their economies and reducing poverty. In addition, they would seriously set back efforts to recover from the Covid-19 pandemic through stifling economic growth, an inevitable consequence of any increase in corporate taxes. As such, we strongly urge you to oppose these proposals in their entirety. 



David Williams


Taxpayers Protection Alliance

Grover Norquist


Americans for Tax Reform Foundation


Steve Pociask

President / CEO

The American Consumer Institute


James Taylor


The Heartland Institute


Graham Young

Executive Director

Australian Institute for Progress


Marko Horg

Global Coordinator

IGO Watch


Robert Alt

President & CEO

The Buckeye Institute


Andrew Langer


Institute for Liberty


Scott Hennig

President & CEO

Canadian Taxpayers Federation


Seton Motley


Less Government


John Hinderaker


Center of the American Experiment


Dr. Jameson Taylor

Senior Vice President

Mississippi Center for Public Policy


Andrew F. Quinlan, President

Dan Mitchell, Co-founder

Center for Freedom and Prosperity


Paata Sheshelidze


New Economic School – Georgia


Jeffrey Mazzella


Center for Individual Freedom


Paul Gessing


Rio Grande Foundation


Iain Murray

Vice President for Strategy

 Competitive Enterprise Institute


Svensk Tidskrift


Svensk Tidskrift



Thomas Schatz


Council for Citizens Against Government Waste


John O’Connell,

Chair & President

World Taxpayers Associations


Jason Pye

Vice President of Legislative Affairs



James L. Martin, Founder/Chairman

Saulius “Saul” Anuzis, President

60 Plus Association


Federico N. Fernández


Fundación Internacional Bases