When Admissibility Breaks: A Pre-Analytical Demonstration of Institutional Threshold Failure

Abstract

This paper presents an application of Fiscal Geometry to the OECD Pillar Two framework, treating global minimum tax rules as a rule-dense environment composed of routable events, classification boundaries, and jurisdictional interfaces. Rather than interpreting Pillar Two as a doctrinal system, the analysis renders it as a structured field in which rule–capital events are generated, filtered, and reclassified across domestic and cross-border settings.

The framework operates on a fixed X–Y plane. The X-axis captures cross-jurisdictional fiscal movement, where capital undergoes reclassification through treaty interfaces, domestic rules, and reporting mechanisms. The Y-axis captures intergenerational post-tax capacity, defined as the directional transmission of post-tax private resources under institutional constraints. Within this coordinate system, individual events—such as income inclusion, top-up tax allocation, and reporting obligations—are represented as observable points generated within formal responsibility chains.

Using publicly available rule structures and compliance pathways, the paper reconstructs how these events accumulate into spatial patterns, including clustering, bottlenecks, and corridor formations. These configurations are formalized through the Institutional Distortion Index (IDI), defined as a descriptive readout of divergence between expected routing structures and observed event distributions. The index does not evaluate policy outcomes but renders structural misalignment visible within the system.

Positioned at the pre-analytical level, the paper does not advance causal claims or normative judgments. Instead, it provides a representational method for reading complex global tax systems as organized fields of constraint, interaction, and transformation. The approach is transferable to other rule-dense domains—such as administrative governance, compliance systems, and education—where institutional outputs emerge through structured routing processes rather than narrative interpretation.