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12 Colum. J. Tax L. 1 (2020-2021)

handle is hein.journals/colujoutl12 and id is 1 raw text is: ARTICLES
A MINIMAL ROLE FOR MINIMUM TAXES
Steven M. Sheffrin*
Abstract
The 2017 Tax Cuts and Jobs Act eliminated the alternative minimum tax for
corporations and sharply eviscerated the alternative minimum tax for individuals. Yet
recently there has been a resurgence of interest in minimum taxes both for the international
tax systems and in certain domestic contexts.
This Article argues that there should be a role, but a very minimal one, for
minimum taxes in our tax system. While reasonable arguments have been put forward for
minimum taxes, on closer examination, many of these arguments are found wanting. This
Article, however, does make a second-best case for one type of minimum tax, namely as a
backstop for a potentially flawed or deficient tax. That is the minimal role for a minimum
tax.
To develop this argument, I explore three distinct theoretical rationales for
minimum taxes that have been put forward. First, I discuss the distinction between
unilateral and multilateral minimum taxes and the potential role that multilateral minimum
taxes can play in alleviating concerns that arise from tax competition and the presence of
tax havens. While unilateral minimum taxes may have a strong rationale, the rationale for
multilateral minimum taxes is not compelling. Second, I show how considerations of
fairness, public perception, and alternative views of the corporation create a demand for
minimum taxes. This demand, however, can be satisfied in other ways. Finally, I discuss
how the imperfect targeting of tax preferences and practical limitations in the design and
effectiveness of the most common taxes can provide a potential, but limited, efficiency
rationale for the use of minimum taxes. I lastly provide an example of the use of minimum
taxes for reforming state corporate taxation.
I.  IN T R O D U C T IO N ................................................................................................. . . 2
II  THREE RATIONALES FOR MINIMUM TAXES .................................................... 4
A. Multilateral Minimum Taxes ................................................................................. 4
B. The Problem of Zero Tax Payments ....................................................................10
C. Efficiency Arguments for Minimum Taxes.........................................................14
III. TAX DESIGN ISSUES..............................................................................................17
* Professor of Economics and Affiliated Professor of Law, Tulane University. I would like to thank
Mary Penn and Spencer Landry for research assistance on this project. Daniel Groft, formerly of the Louisiana
Department of Revenue, kindly provided data for this Article. Janet Schwartz, Michele Hanlon, and Drew Lyon
all pointed me to interesting research on this topic. James Alm and Katie Weaver provided valuable comments
on earlier drafts.

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