The above is article from Hindu. Since last few days a discus | ECONOMY by VIVEK SINGH

The above is article from Hindu.
Since last few days a discussion is going on that there should be a "Global Minimum Corporate Income Tax" and countries should keep their corporate income tax above that level. Why this idea is being mooted by US and other developed countries and why it is being opposed by the President on the World Bank and How it will exactly impact us??

Actually post 1990 after the collapse of the Soviet Block, Eastern European Nations started reducing the corporate and other direct taxes (dividend distribution, capital gain tax etc) to attract the global capital and this started a race to the bottom. Countries reduced the tax rate to attract foreign investors/capital and to dissuade the capital from leaving their countries. This resulted in decrease in resources and Govt's reduced their spending on education, health and other civic amenities. Then developing countries (India also reduced the corporate tax drastically in 2019 to attract investors) also followed this even though private markets do not cater to the poor i.e. the private companies who got excess income because of reduced taxes do not serve the poor and this resulted in disparities/ inequalities.

Because of the reduced direct taxes, Govts have generally resorted to increasing indirect taxes (VAT and GST) for their revenue generation. Indirect taxes are regressive in nature and hurts the poor more as compared to rich and is inflationary (see ECO 550 MCQ pdf). This results in inequality. Rising inequality results in shortage of demand in the economy which then requires more investment and that calls for more concessions on capital. However it does not guarantee investment because investment in response to tax cut is not guaranteed. However, increased govt. spending are sure to raise demand.

Direct taxes tend to lower the post tax income inequality because it takes more taxes from the rich which is used to distribute to the poor.

But, now this is the time for developing countries to attract investment/capital through competitive (reduced) tax rates and that is why it may be difficult to convince them to agree to a minimum corporate tax.