A Practical Proposal to end Corporate Tax Abuse: METR, a Minimum Effective Tax Rate for Multinationals

Abstract

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Effective Tax Rates and Firm Size

“…Our simulations complement existing simulations of the revenue effects of the global minimum tax (Baraké et al, 2022;Cobham et al, 2021;Devereux et al, 2020;OECD, 2020). 24 Our estimates are higher than the OECD's estimates, but in line with those in Baraké et al (2022).…”

“…This contrasts with previous work that relies on aggregate data for residence-source-country pairs, drawn from the Country-by-Country reporting (CbCR) data, and macro estimates of ETRs. These data suffer from several measurement issues (discussed in Cobham et al 2021 andOECD 2020) and are incomplete for developing countries.…”

“Wild” tariff schemes: Evidence from the Republic of Georgia

“…for all kWhs used. 8 One would expect this scheme to generate a large enough penalty on excessive consumption as to induce restraint. The incentive to conservation should be clear to the consumer, since with this tariff structure the average price per kWh is equal to the marginal price.…”

“…Further revisions in the tariffs in 2017 and 2018 provide additional variation, which, combined with the 2013-2016 changes, lets us estimate a demand function. 8 To illustrate, consider the tariffs in place in 2019 (which remained in force until the end of 2020). An Energo-Pro Georgia customer who used 101 kWh in a month would be billed 101*0.1424=14.38 Georgia Lari (GEL), but 102*0.18207=18.57 GEL if had used 102 kWh (a 28% increase with respect to the bill if the first-block rate had been applied to 102 kWh).…”

Commodities and Development Report

“…In the absence of an agreement that would have resolved all the above-mentioned risks and uncertainties, a group of leading tax experts have devised a more equitable, far less complex, and more practical proposal for a global anti-base erosion tax (Cobham et al, 2021;Picciotto et al, 2021). This relates to a minimum effective tax rate (METR), which could be introduced by a coalition of willing countries, whether they are home to MNEs, host of MNEs, or both.…”