By Bethany Blankley, The Center Square
Republican lawmakers are pushing back against the Biden administration’s plan to join a global compact implementing a tax on U.S. corporations regardless of where they operate.
One hundred and thirty six countries agreed Friday to implement a global business tax, and G-7 finance leaders agreed to the plan Saturday. President Joe Biden and Treasury Secretary Janet Yellen praised the plan.
Proposed by the Paris-based Organization for Economic Co-operation and Development (OECD), an intergovernmental economic organization, the global tax is necessary to respond to an “increasingly globalized and digital global economy,” OECD said.
Senate Finance Committee Republican Leader Sen. Mike Crapo, R-Idaho, and House Committee on Ways and Means Republican Leader Rep. Kevin Brady, R-Texas, blasted the Biden administration’s announcement that it had reached an agreement with OECD, pledging the U.S. to the plan.
“Rather than securing an agreement that would provide certainty and immediately eliminate digital services taxes, the Administration has instead used this global forum to advance its short-sighted domestic tax agenda,” they said in a joint statement.
The Biden administration “is putting politics over progress and surrendering the fate of the U.S. economy to our foreign competitors,” they add, “putting America at a serious disadvantage and making it better to be a foreign company or worker than an American one.”
They argue, “U.S. businesses will be hit by tax increases ultimately borne by American workers, savers and consumers,” on top of the tax increases already proposed by the Biden administration and Democrats.
The global tax is structured in two “pillars.” Pillar One requires the “largest and most profitable multinationals,” which is not yet defined, to pay taxes to the governments of the countries in which they operate – not just where their headquarters are located.
It applies “to global firms with at least a 10% profit margin – and would see 20% of any profit above the 10% margin reallocated and then subjected to tax in the countries they operate,” the U.K. Treasury explained.
Pillar Two creates a minimum 15% global minimum corporation tax on a country-by-country basis.
Yellen told ABC News on Sunday that the global tax could be part of the $3.5 trillion budget reconciliation bill being debated before Congress.
“I am confident that what we need to do to come into compliance with the minimum tax will be included in a reconciliation package,” Yellen said. “I hope that we, that it will be passed and we will be able to reassure the world that the United States will do its part.”
Crapo and Brady previously expressed concerns in a letter to their Democratic counterparts in September. They wrote, “Soon after negotiating an agreement at the OECD, Treasury Secretary Yellen acknowledged that Congress would be required to enact significant domestic tax law changes in order to comply with the agreement.
“Whereas prior administrations took the position that Treasury cannot bind Congress, this Administration has taken the approach of using the global stage to attempt to force Congress’s hand. This concerning development suggests the Administration has represented to our global partners that it can unilaterally compel changes in tax law, a significant infringement on Congressional authority.”
Crapo, again on Friday, expressed his concerns, this time joined by Senate Foreign Relations Committee ranking member Jim Risch, R-Idaho, and Banking Committee ranking member Pat Toomey, R-Pennsylvania. In a letter, they asked Yellen to clarify recent comments she’s made about the global tax and reiterated the importance of following the constitution when agreeing to tax treaties.
“As you know, under the U.S. Constitution, a bilateral or multilateral tax treaty would require the advice and consent of the Senate, with a two-thirds vote of approval,” they said. “Further, we are unaware of any existing congressional authorization that would permit the Administration to conclude a lesser international agreement, such as a congressional-executive agreement. As described, the nature of changes required to implement Pillar One necessitates the conclusion of a treaty, not a congressional-executive agreement or other legislative override.”
The multi-country deal was reached on Friday after holdouts India, Ireland, Estonia, and Hungary withdrew their long-held opposition. The four countries that remain opposed include Kenya, Nigeria, Pakistan, and Sri Lanka.
The tax would impact 90% of the global economy, OECD estimates, with the minimum 15% global tax bringing in an additional $150 billion in revenue annually. It remains unclear how the global tax would be enforced, according to OECD.
After G7 representatives approved the plan on Saturday, a G-20 finance committee is expected to formally endorse it at an Oct. 13 meeting in Washington, D.C. Next, G-20 leaders said they are also expected to seal the deal at a summit in Rome at the end of the month.
The governments of the 136 countries that agreed to the plan would then be required to pass legislation to comply with the OECD plan. Assuming all the agreements are reached this year and legislation is subsequently passed, Pillar One would go into effect in 2023, and Pillar Two by mid-2022, according to OECD’s timeline.
Categories: National News
NWO Here we go again !
what about china? they don’t have any green energy or carbon tax initiatives but they are the world’s biggest polluter! are they going to be paying a global business tax? insanity in government!