Koch-backed group: Congress shouldn't propose new foreign tax

Koch-backed group: Congress shouldn't propose new foreign tax
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An advocacy group backed by wealthy GOP donors Charles and David Koch is pushing back against the idea of a minimum tax on U.S. companies’ foreign earnings.

Lawmakers are looking at a foreign minimum tax as they work on rewriting the tax code and discuss how to prevent U.S. companies from shifting profits overseas. But Americans for Prosperity (AFP) views the idea as counterproductive.

“Policymakers in Washington should be focused on making the American economy more competitive, rather than looking for new revenue streams from American businesses and their customers,” AFP chief government affairs officer Brent Gardner said in a statement Monday. “Just like every other misguided tax hike, extracting more revenue from American companies comes out of the pockets of customers and consumers.”

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Under current law, U.S. companies’ foreign earnings are subject to the 35 percent corporate tax, but only when the profits are repatriated back to the U.S. Businesses also can receive credits for foreign taxes paid.

The White House and congressional Republicans are interested in lowering the corporate tax rate and moving toward a “territorial” tax system that only taxes U.S. companies on their domestic earnings. But they also want to prevent businesses from shifting profits to other countries in order to avoid taxes.

In the past, former President Barack ObamaBarack ObamaObama intel chief wonders if Trump is trying to make 'Russia great again' Sean Spicer’s most memorable moments as press secretary Trump approval rating sets new low in second quarter: Gallup MORE and former House Ways and Means Committee Chairman Dave Camp (R-Mich.) proposed foreign minimum taxes as a way to prevent an erosion of the U.S. tax base.

Under the proposals, there would be a minimum tax on companies’ foreign earnings that is paid regardless of whether the profits are repatriated. The rate of the minimum tax would be lower than the corporate tax on domestic earnings, and companies would not have to pay any U.S. taxes on foreign earnings if the effective foreign tax rate on those earnings exceeded the minimum tax rate.

House Republicans did not include a foreign minimum tax in the blueprint they released last year, instead offering as an anti-base erosion measure their border-adjustment proposal to tax imports and exempt exports.

But since the border-adjustment tax has faced deep resistance from senators and some businesses, lawmakers are now looking at other options such as the minimum tax. Sen. John ThuneJohn ThuneSenate panel won’t vote on bill to boost ethanol Senate heads to new healthcare vote with no clear plan McCain absence adds to GOP agenda’s uncertainty MORE (R-S.D.) told Politico that a minimum tax is “under discussion.”

AFP opposes concepts such as a minimum taxes, border-adjustment taxes and value-added taxes because they view them as tax hikes.

“Congress needs to get busy with their plan to un-rig the American economy and move on from unproductive policies, whether it be the BAT, VAT, or foreign minimum tax,” Gardner said.

AFP and other groups in the Koch brothers’ network are urging lawmakers to produce tax-reform legislation that follows five principles: simplicity, efficiency, equitability, predictability and no new burdens on taxpayers. The Koch network has committed to spending millions of dollars on a campaign to rally lawmakers behind these principles.