U.S. Treasury Secretary Janet Yellen and other attendees at the G-7 summit in Germany, May 2022
Thilo Schmuelgen / Reuters

For decades, countries have attempted to attract multinational companies by lowering corporate taxes, and companies have responded by shifting reported profits toward low-tax jurisdictions. As a consequence, governments have lost hundreds of billions of dollars in revenue at the same time that multinational companies often pay single-digit tax rates. Although corporations and their shareholders have benefited from this race to the bottom, governments were left with no alternative but to shift tax burdens toward consumers and workers.

Last year, more than 135 countries signed an agreement to transform international taxation by requiring profitable companies to pay at least 15 percent in corporate

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