Several leading Senate Republicans have rejected Treasury Secretary Janet Yellen’s G7 deal to impose a global minimum corporate tax and allow more states to tax large multinationals, raising questions about the U.S.’s ability to implement a broader global agreement.
Republican opposition may urge President Joe Biden to try to use budget procedures to pass initiatives with only democratic votes.
“It’s wrong for the United States,” Republican Sen. John Baraso said of a tax deal struck Saturday by finance ministers from the G7’s rich democracies.
“I think it’s going to be anti-competitive, anti-American, harmful to us as we try to keep growing the economy, and certainly as we emerge from a pandemic,” Baraso, chairman of the Senate Republican Conference, told reporters at the US Capitol.
In the landmark agreement, G7 finance ministers agreed to follow a global minimum tax rate of at least 15% and allow market countries to tax up to 20% of excess profits – more than 10% margin – on about 100 large, high-end companies. profit.
Yellen said the “significant, unprecedented commitment” would put an end to what she called a race to the bottom of global taxation.
In return, the G7 countries have agreed to suspend taxes on digital services, but the timing depends on the new rules that apply.
The deal could pave the way for wider buyouts from G20 countries and about 140 economies involved in international negotiations on how to tax large technology companies such as Alphabet Inc (GOOGL.O) Google, Facebook Inc (FB) .O), Amazon. com Inc (AMZN.O) and Apple Inc (AAPL.O). All are expected to be included in the new, broader mechanism, which is aimed at a final international agreement in October.
Republican Sen. Pat Tomy said the deal would drain tax revenues from the U.S. Treasury Department to other countries, adding that he hoped some Democrats would not want to “subject the U.S. economy to this kind of misery.”
“There will be no Republican support for this and they will have to do it in a party vote. This has to fail,” Toomi told Fox Business Network.
CONTRACT OR NOT
Daniel Bunn, an international tax expert at the Tax Foundation, a right-leaning think tank in Washington, said he believed establishing new tax rights on 100 multinational companies would require a new tax treaty.
The US Constitution gives the president the right to conclude international treaties “if two-thirds of the senators present agree.” US participation in some international treaties has been hampered by internal guerrilla divisions, in which the president approves the deals but they are not ratified by Congress.
Manal Corvin, KPMG’s head of national tax practice in Washington and a former U.S. Treasury official, said Yellen’s G7 deal could be made through legislation that replaces existing bilateral tax treaties – using a simple majority such as part of the budget coordination procedures.
With Vice President Kamala Harris as a tiebreak, Democrats control 51 votes in the Senate, but cannot afford to lose a single Democratic vote.
Asked how much could be done with the budget conciliation procedures and what an overwhelming majority vote would require, Senator Ron Wyden said: “These are all issues that lawyers are now immersed in.”
Widen, who chairs the Senate Finance Tax Committee, told reporters that deterring the use of countries that are tax havens and ensuring minimum levels of corporate taxation are “in the long-term interest of American workers.”
“There’s a lot to lift heavy things here,” Wyden added. “It’s going to take a few months, that’s for sure.”
Toomi, a member of the Finance Committee, said he believed Democrats could push through tax changes only by democratic votes, without a treaty, but added that the United States would have to surrender and agree not to oppose changes imposed by other countries.
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