Top Republican signals early resistance to any global tax deal
Rep. Kevin Brady (R-Texas) on Wednesday said he thinks it will be challenging for Congress to sign off on an international tax deal, as the Biden administration seeks to make progress on such an agreement this week.
“I think this is frankly years from being done, and I’m confident that Congress will reject any tax agreement that advantages foreign companies and workers over U.S. companies, or surrenders a key part of America’s tax base that we’ll need frankly to pay for our government services going forward,” Brady, the top Republican on the House Ways and Means Committee, said on a call with reporters.
Brady’s comments come as Treasury Secretary Janet Yellen is set to attend the Group of 20 (G-20) finance ministers meeting later this week in Venice, Italy. International tax negotiations are expected to be a key topic of conversation at the meeting.
The G-20 and the Organization for Economic Cooperation and Development (OECD) have been working to reach an agreement in two areas. The first pertains to rules about the location of where companies’ profits are taxed, and the second pertains to a global minimum tax. Last week, 130 countries participating in the discussions endorsed a framework that called for a global minimum tax for corporations of at least 15 percent, and the countries are aiming to finalize a detailed implementation plan in October.
Congress would play a role in U.S. implementation of an agreement. Both chambers would need to vote to update U.S. tax laws, and the Senate would also likely need to vote to update tax treaties.
The Biden administration has made an agreement on a global minimum tax a key priority, arguing that a deal would help to prevent companies from avoiding taxes by shifting profits to low-tax countries.
President Biden last week said Congress should build upon an international agreement by enacting his proposals to increase U.S. corporate taxes. The president has proposed raising the U.S. corporate tax rate to 28 percent.
Brady argued that the administration’s push for an international agreement is an “admission that the Biden tax rates will make America dramatically less competitive.” He also expressed concerns that some jurisdictions may still want to levy digital services taxes that impact U.S. tech companies even after an international tax deal is reached.
“I think there are too many competing interests here for them to finalize a deal that would be agreeable to Congress,” Brady said.