House Republicans on Thursday introduced legislation aimed at excluding the US from participating in multinational tax changes that the Biden administration helped negotiate with the Organization for Economic Co-operation and Development.
House Ways and Means Committee Chairman Jason Smith, R-Missouri, along with other Republicans on the Tax Committee, introduced HR 3665, the Protecting American Jobs and Investments Act, which would create a retaliatory tax applicable to any foreign country. which imposes taxes on US businesses and workers under the OECD Global Tax Agreement.
The bill Requires the Treasury Department to disclose extraterritorial taxes and discriminatory taxes imposed by foreign countries on US businesses, such as the OECD Taxable Profits Rule. After the foreign taxes are imposed, tax rates on U.S. income of wealthy investors and corporations in these foreign countries will increase by 5 percentage points annually for four years, after which tax rates will remain elevated at 20 percentage points while unfair taxes are in place.
A retaliatory tax would cease to apply once a foreign country repeals its extraterritorial taxes and would remain dormant as long as countries avoid imposing such taxes on US businesses and workers. Several countries have already decided to exclude the taxable profit rule surcharge from implementing the OECD’s global minimum tax, Smith’s office noted.
“This bill sends a clear warning to any nation tempted to exploit the success of our workers and businesses for their own benefit,” Smith said in a statement. “Republicans are taking action where the Biden administration failed — to protect the interests of American workers and families. We will not allow the bad deal that the Biden White House is negotiating to allow foreign governments to take jobs and opportunities away from Americans. And we will not be silent, While other countries will use the OECD’s global tax treaty to raise more than $120 billion in tax revenue over the next decade.
At least one Senate Republican supports the legislation. “I support the efforts of Chairman Smith and Ways and Means Republicans to pass measures to prevent foreign countries from taxing and collecting U.S. revenues inconsistent with U.S. law and our bilateral tax treaties,” Sen. Mike Crapo, R-Idaho. the ranking Republican on the Senate Finance Committee said in a statement Thursday. “If other countries continue to impose extraterritorial or discriminatory taxes, Congress will be forced to enact remedial measures to protect U.S. interests. I will continue to work with my Republican colleagues on the most effective options to protect America’s sovereignty over our tax policies. These remedial measures will never take effect, I am determined I encourage foreign-based companies in the US to actively lobby their foreign governments to eliminate these extraterritorial and discriminatory taxes.”
His colleague from the democratic side protested the legislation.
“In 2017, Republicans passed a tax law that created new incentives to send jobs and take profits overseas, and they resisted any efforts to ensure that multinational corporations pay their fair share,” said Senate Finance Committee Chairman Ron Wyden, D-Oregon. . statement. “It is now abundantly clear that the world is moving forward with international reforms aimed at stopping the race on corporate taxes, yet Republicans are trying to prevent it. The most likely consequences of this approach are all bad for Americans. businesses and workers. In the near term, the introduction of this bill alone means that the Treasury Department will find it much more difficult to advocate for American interests in negotiations with other countries. In the long run, the US will lose investment and jobs as a result. Of the new taxes that Republicans are proposing, they are unlikely to deter other countries from advancing international tax reforms.