House Republicans are set to repudiate U.S. Treasury Secretary Janet Yellen for telling other countries that the U.S. is on board with a global tax initiative aimed at punishing global corporations.
All 25 Republicans on the House Ways and Means Committee have co-authored the Defending American Jobs and Investment Act (H.R. 3665), which would impose retaliatory taxes on countries that impose harsh taxes on American companies. This bill doesn’t come out of nowhere, however. It’s a direct response to Yellen telling global leaders that the U.S. would like to take part in the global tax – one that would benefit European companies and punish American ones.
The first pillar lets other countries impose special taxes on multinational tech companies. The second pillar allows a country such as France or Germany to impose a “top-up” tax on an American company if the U.S. firm’s effective global tax rate falls below 15%. We’ve warned from the start that Ms. Yellen’s participation in this tax circus is bad policy, bad law and bad diplomacy—and now here we are.
The policy ploy was that the Biden Administration could use a global tax increase to blunt the competitive deadweight of its proposed corporate tax increases on U.S. companies. But the OECD resisted setting the minimum tax rate anywhere near the level the Administration sought for the U.S.
European and other negotiators also outfoxed Ms. Yellen by securing favorable treatment for tax credits preferred in Europe while punishing the sort of credits and deductions that Congress traditionally offers U.S. companies. The result is a global tax regime that, if implemented, would make the U.S. even less competitive rather than more so.
A nice kick back would be my best guess