Shaviro: What Are Minimum Taxes?

Daniel Shaviro (NYU), What Are Minimum Taxes, and Why Might One Favor or Disfavor Them?:

The alternative minimum tax (AMT), a key and at the time widely lauded feature of the Tax Reform Act of 1986, soon fell into disrepute and was subsequently scaled back, to general approbation and relief. Yet in recent years minimum taxes have come back into vogue. For example, two key international tax provisions in the 2017 tax act (GILTI and the BEAT) had minimum tax structures, and the OECD has recently issued proposed guidelines for the design of a global minimum tax, meant for multilateral adoption.

In light of minimum taxes’ surprising return to center stage, this paper explores such issues as the following:

1. the purposive, technical, and semantic contours of instruments we call “minimum taxes,”
2. why a minimum tax structure matters – pertaining, for example, to the creation of clientele effects and discontinuous marginal incentives,
3. the lessons to be learned from the rise and fall of the AMT,
4. minimum taxes’ similarity to foreign tax credit limitations and loss nonrefundability,
5. the design question of whether, if highly profitable companies’ financial accounting income were made tax-relevant, this should be done through a minimum tax,
6. how one might rationalize (or not) the BEAT’s minimum tax structure, and
7. the main issues posed by global minimum taxes, including GILTI and the OECD’s Pillar Two GloBE proposal.