Most of today's tax systems trace back to the early 20th century, when governments needed to fund the World Wars and the growing welfare state. The US introduced a constitutional federal income tax in 1913 (16th Amendment); Canada followed in 1917 as a wartime measure that never expired; the UK's income tax dates to 1799 but became permanent and progressive through the same era. Corporate income tax generally followed personal income tax by a decade or two in most economies.

Consumption taxes evolved on a separate track: Mississippi created the first US state sales tax in 1930 during the Great Depression, while France invented VAT in 1954 and the EU made it mandatory for all members by 1977. Those two consumption-tax lineages — single-stage US sales tax and multi-stage VAT/GST — still divide the world's tax systems today.

From the 1980s onward, globalization triggered a corporate tax "race to the bottom": the worldwide average statutory rate fell from roughly 40% in 1980 to about 23% today, as countries like Ireland (cutting to 12.5% in 2003) competed aggressively for foreign investment.

That race slowed dramatically after 2021, when over 140 countries in the OECD/G20 Inclusive Framework agreed to a 15% global minimum corporate tax (Pillar Two) for large multinationals, aiming to stop profit-shifting to ultra-low-tax jurisdictions. Statutory rates have since stabilized rather than continuing their decades-long slide — a direct, measurable result of that 2021 agreement.