I agree with Tyler Goodspeed in his critique of the Organization for Economic Cooperation and Development’s two-pillar project: It’s an overly complicated proposal that will do little to limit competition for direct investment from multinationals (“The Global Minimum Tax Crackup,” op-ed, Feb. 6). Unfortunately, the complexity also means some of his arguments fall flat.
His suggestion that only low-tax jurisdictions have a new playbook available to them is incorrect. Large, high-tax countries can review their systems of capital allowances, top personal income-tax rates and other aspects of their tax system in light of the OECD rules. This new form of tax competition could end up being pervasive.
Mr. Goodspeed is right to suggest that double taxation is a risk for U.S. companies because of the mismatch between U.S. rules and the minimum-tax rules. But this risk isn’t new. The limitation on foreign tax credits under the Global Intangible Low-Tax Income (Gilti) regime leads directly to double taxation even without the new “Pillar Two” rules in place.