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In the tax policy world, an outcome that isn’t just about the worst possible option is a pleasant surprise. So while the Organization for Economic Cooperation and Development (OECD)/G20 initial global minimum tax deal is far from a good thing overall, it at least offers a silver lining in the form of an effort to end digital taxes as part of the bargain.

When I wrote about the negotiations over global minimum taxes last month, I gloomily raised the possibility that the United States would roll over on digital taxes in order to secure an agreement on a global minimum tax. At this point, it appears that won’t come to pass — and I’m very happy to be wrong.

Even so, this is hardly a win for good tax policy. American multinationals are in for enough of a hit even without having to worry about digital taxes. A global minimum tax deal is little more than a convoluted effort to avoid the obvious conclusion that countries should just focus on making their corporate tax codes more competitive. After all, even though corporations directly pay corporate taxes, a great deal of the burden of the tax falls upon labor.

Efforts to establish a global minimum tax would shield countries from the consequences of corporate taxes in terms of tax competitiveness, but they would offer no protection whatsoever from the economic consequences of higher corporate tax rates. Minimum tax holdout countries like Ireland and Hungary recognize that the tradeoff of slightly less corporate tax revenue in order to attract and encourage business investment is worthwhile.

The tax also suffers from the usual drawbacks of a politically-charged tax issue. Desperate to make sure the structure of the tax affected Amazon, the proposal includes a provision ensuring that multinationals exceeding certain revenue thresholds in a given jurisdiction are still targeted by the tax, overriding other provisions exempting low-margin businesses. It’s rarely a sign of well-structured tax policy when convoluted provisions are added specifically to target one company.

The global minimum tax deal also has to be considered in the context of what else President Biden hopes it will give him the latitude to do on the corporate tax front. Not only does Biden seek to raise the corporate tax rate, but he also wants to return to the disastrous “worldwide” tax system in place before the 2017 Tax Cuts and Jobs Act (TCJA).

Prior to the TCJA, the United States was one of just a few countries that attempted to tax multinational corporations on their profits earned in other countries. That meant the United States had a hard time getting businesses to headquarter in America, as most preferred to simply headquarter in one of the many other countries that did not have this requirement.

Biden may hope that the global minimum tax will make this less of a concern for businesses, but that’s unlikely. Combined with his proposed 10 percent offshoring surtax and doubling of the tax on global intangible low-taxed income (GILTI), the message that the United States intends to tax businesses for whatever it can get would be heard loud and clear.

With all that said, at least there appears to be one thing to be optimistic about in the tax deal. Foreign efforts to tax American digital businesses were a fairly naked cash grab at an American-dominated industry, and American diplomats were right to prioritize language that allows for the “removal of all Digital Service Taxes as part of the deal.

Don’t feel compelled to celebrate a provision that upgrades the deal from “awful” to “slightly less awful.” But whatever our ideological disagreements over corporate taxes more broadly, President Biden did well to ensure that other countries’ efforts to impose special taxes on American businesses died an ignominious death.

Andrew Wilford is a policy analyst with the National Taxpayers Union Foundation, a nonprofit dedicated to tax policy research and education at all levels of government. 

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