The United States: the biggest loser, and the reason the global deal stalled

The United States loses more to corporate tax abuse than any other country on earth, about $32.6bn a year. It also built a minimum-tax system of its own and then used it as the reason to walk away from the global one. Both facts come from the public record.

The gap, made public: the 2013 Senate hearings on a major tech group

On 21 May 2013 the Senate Permanent Subcommittee on Investigations held a hearing on offshore profit shifting and the US tax code, examining a major US technology group. The full record is public as document CHRG-113shrg81657.

The subcommittee laid out the architecture. The group's principal offshore holding company was incorporated in Ireland but claimed tax residency in neither Ireland nor the US, exploiting the gap between the US "place of incorporation" test and the Irish "place of management" test. It received billions in income and, for several years, filed no tax return anywhere. A second Irish-incorporated affiliate held the rights to the group's non-US intellectual property through a cost-sharing agreement, took around $36bn in income in 2012, and paid near-zero Irish tax while being managed from the group's US headquarters. Check-the-box elections made the transactions between these entities invisible to the US anti-deferral rules.

The subcommittee's chair described the structure plainly: the group had created offshore corporations with, in his words, no tax residence, not in Ireland where they were incorporated and not in the United States. The subcommittee found the group had accumulated more than $100bn offshore. And the subcommittee was explicit that there was no indication the company had acted illegally. The hearing was an indictment of the US tax code, not of the group's compliance.

The US answer: its own minimum tax, built instead of the global one

The US has no general anti-avoidance rule of the UK or Canadian kind. It relies on judicial doctrine (the economic substance doctrine, codified at IRC section 7701(o) in 2010), the old Subpart F controlled-foreign-corporation regime from 1962, and the international provisions added by the Tax Cuts and Jobs Act of 2017.

The 2017 Act built three tools. GILTI imposed a minimum tax on US companies' excess offshore profit, payable currently rather than deferred. BEAT was a minimum-tax backstop on companies stripping their US base with deductible payments to foreign affiliates. FDII was the carrot, a deduction designed to reward keeping intellectual property in the US.

Those original rates have since been overwritten. The One Big Beautiful Bill Act, signed 4 July 2025, pre-empted the increases the 2017 Act had scheduled for 2026 and set permanent rates for tax years beginning after 31 December 2025. GILTI was renamed Net CFC Tested Income (NCTI), with an effective rate of about 12.6% and the deemed-tangible-income exclusion eliminated, and the foreign tax credit haircut eased from 80% to 90%. FDII became FDDEI at an effective rate of about 14%. BEAT was set permanently at 10.5%. The point of recording this is that the US system is now a settled, permanent regime, not a temporary one, which matters for the next part.

Why the US stalled Pillar Two

The US signed the October 2021 OECD statement endorsing the global minimum tax alongside more than 130 jurisdictions, but never enacted domestic Pillar Two legislation. Congressional opposition held that GILTI was already the US's own minimum tax and a second, OECD-designed one was unnecessary. In January 2025 the administration disavowed the OECD deal by Presidential memorandum. Then, on 28 June 2025, the G7 agreed the "side-by-side" arrangement: participating members would not apply the Undertaxed Profits Rule to US-parented groups, and the US GILTI/NCTI regime would be recognised as co-existing with Pillar Two. The European Parliament described it as a significant concession that risks undermining the unified architecture. In effect, the country that loses the most to profit-shifting secured a carve-out for its own multinationals from the main international fix.

What the US loses

The US loses about $32.6bn a year ($32,556.8m) to cross-border corporate tax abuse, the largest absolute figure of any country in the State of Tax Justice 2024 (data year 2021). The same dataset shows it also inflicts about $37.5bn ($37,487.0m) on others, so it is simultaneously the biggest victim and a very large source.

The scale of what is at stake domestically is on the record elsewhere too. The Joint Committee on Taxation, scoring the offshore-loophole provisions of the 2021 Corporate Tax Dodging Prevention Act, estimated that closing that abuse would raise over $1tn over ten years. The 2017 Act's international provisions were themselves projected to raise $324bn over a decade.

What a US small business can legitimately do

A US small business operates in a different tax world from a multinational, and not in its favour. Over 95% of US businesses are pass-throughs, taxed at the owner's individual rates with no access to corporate cross-border planning at all. The legitimate toolkit is domestic and generous within its limits: Section 179 allows an immediate deduction of up to $2.5m on qualifying property (2025, raised by OBBBA), bonus depreciation is back to 100% and permanent, the Section 199A qualified business income deduction is permanent at 20%, and small firms can apply up to $500,000 of research credits against payroll tax. These are worth using. They are also the entire menu, with no offshore options, which is precisely the asymmetry this site documents: the smallest businesses get deductions, the largest get jurisdictions.