IMF Warns Debt-Financed Corporate Tax Cuts and Policy Spillovers Threaten Global Growth
The International Monetary Fund warned that corporate income tax policies generate cross-border spillovers through profit shifting, investment reallocation, and knowledge transfers. According to an analytical chapter of its October 2026 World Economic Outlook, debt-financed tax cuts raise global interest rates and crowd out investment abroad. The fund also found that a one percentage point corporate tax rate hike relative to foreign rates leads to a cumulative 0.5 percent of GDP drop in FDI inflows over three years.




