Posted on 10/12/2021 11:45:53 AM PDT by Red Badger
Under pact, 20% of profits above 10% margin would be siphoned off by tax authorities in participating countries where corporations operate.
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President Joe Biden and U.S. Treasury Secretary Janet Yellen are urging Congress to approve an international agreement for a global corporate tax of 15%, raising alarm among key GOP senators of an administration plan to circumvent the Senate's treaty power under the U.S. Constitution.
Some Republicans argue the global tax — on top of other tax hikes proposed by the Biden administration — would destroy American businesses and worsen the U.S. economy.
The global tax is necessary to respond to an "increasingly globalized and digital global economy," its proponents, the Paris-based Organization for Economic Co-operation and Development, an intergovernmental economic organization, argues.
On Friday, 136 countries agreed to implement the plan, which would impact the largest and most profitable multinational companies operating in their countries and around the world. On Saturday, G7 finance ministers met in London and also approved the plan.
The U.K. Treasury has explained the tax proposal, which has two "pillars." Pillar one requires the largest and most profitable multinationals to pay tax in the countries where 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 subjected to tax in the countries in which they operate. Pillar two creates a minimum 15% global minimum corporation tax operated on a country-by-country basis.
Yellen told ABC News on Sunday that the global tax could be added to the $3.5 trillion budget reconciliation bill currently 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," she said, adding her hope "that it will be passed and we will be able to reassure the world that the United States will do its part."
Requiring the U.S. to participate in a global tax, Republicans argue, would require the U.S. to sign an international tax treaty, which it hasn't done. The Constitution stipulates that only the U.S. Senate can ratify treaties, requiring a two-thirds majority, or 67 votes, to pass.
Following the constitutional process would require all Democrats to vote for it, in addition to 17 Republicans. Because these votes appear to be unlikely, the ranking Republican members of three Senate committees — Finance, Foreign Relations, and Banking — have expressed concerns that the Biden administration would bypass the Constitution, thus usurping Senate powers and compromising the political sustainability of any 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," Senators Mike Crapo (R-Idaho), Jim Risch (R-Idaho) and Pat Toomey (R-Pa.) wrote to Yellen Friday, citing her Banking Committee testimony last week that while a Senate-ratified treaty "would be one way" to gain congressional approval of the tax scheme there were "a number of ways" available to achieve that end.
"We are especially concerned given Treasury has failed to meaningfully consult our members on the potential treaty or legislative action that would be necessary to fully carry out the Pillar One agreement. the senators wrote. "In particular, the Senate Foreign Relations Committee, which has jurisdiction over treaty matters, has received no engagement from Treasury on this issue to date."
The lawmakers concluded: "The lack of consultation, in addition to these latest statements calls into question how serious Treasury is in achieving bipartisan consensus on any Pillar One agreement. Further, Treasury’s continued use of the negotiations to advance the Administration’s tax agenda on Pillar Two, at the expense of ceding substantial U.S. taxing rights to a global rulemaking body without seeking constitutionally mandated approval, puts the durability of any agreement at significant risk."
Using the World Economic Forum and United Nations language of "building back better," repeated by heads of state worldwide over the last year, Biden said Friday the agreement "is proof that the rest of the world agrees that corporations can and should do more to ensure that we build back better."
Yellen said the "global minimum tax would end the race-to-the-bottom in corporate taxation, and ensure fairness for the middle class and working people in the U.S. and around the world."
"The fairer system will mean the UK will raise more tax revenue from large multinationals and help pay for public services here in the UK," the U.K. Treasury declared.
In a joint statement on Friday, Senate Finance Committee ranking member Sen. Mike Crapo (R-Idaho) and House Committee on Ways and Means ranking member Rep. Kevin Brady (R-Texas) lambasted the Biden administration.
"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. "By doing so, the Biden Administration is putting politics over progress and surrendering the fate of the U.S. economy to our foreign competitors."
Claiming the tax would put "America at a serious disadvantage" and make it "better to be a foreign company or worker than an American one," the lawmakers said, "As other countries delay implementation and secure side agreements and carveouts to protect their own companies, U.S. businesses will be hit by tax increases ultimately borne by American workers, savers and consumers."
The OECD plan would make American companies "less competitive, ultimately resulting in fewer jobs, growth, and U.S. investment," they maintain.
The multicountry deal was reached on Friday after India, Ireland, Estonia, and Hungary dropped their opposition. Kenya, Nigeria, Pakistan, and Sri Lanka remain opposed.
The tax would impact 90% of the global economy, OECD estimates, with the minimum 15% tax rate bringing countries an additional $150 billion in new revenue annually. It remains unclear how the global tax would be enforced.
After the G7 meeting on Saturday, a G20 finance committee is expected to formally endorse the global tax at a meeting in Washington, D.C., on Oct. 13. Then leaders meeting at a G20 summit in Rome at the end of October are expected to seal the deal. All agreeing countries worldwide would then be required to pass legislation to comply.
Oh they “fear” that huh? It’d be best to count on it. That way you’re ahead of the commie.
Constitution? We don’t need no stinking constitution!
I can’t imagine how this would be done without a treaty, and I cannot imagine the Senate ratifying the treaty.
Well.
That was in the old world when we still had a Republic ruled by law. Now, they simply ignore the law, and nobody calls them on it. So I guess I could see this happening.
Votes without voters.
When they eliminate the filibuster, and pack the SC, the Constitution will be nothing but road kill to these marxists.
.
The Republican Senate protected Joe and his Foreign Cash machine for four years to get him in there.
So, I’m skeptical.
.
Lots of people will work underground or barter.
We’ve concentrated too much power in the White House over the years. With a complicit media, the people running Biden have very few limits.
The global tax is necessary to respond to an "increasingly globalized and digital global economy,"
Okay, kill it. Kill the globalized economy. Kill the digital economy. if taxes are the answer to keeping it alive, then there is no reason for it to exist.
They are trying their damnedest!...................
> I can’t imagine how this would be done without a treaty, and I cannot imagine the Senate ratifying the treaty. <
You’re right about that. So Biden’s handlers won’t use the word “treaty”. They’ll call it an “international agreement” instead. The Supreme Court needs to slap this down, and hard. But will they?
In order to have a global tax, wouldn’t you have to
have a global government first?
Did I miss that part?
the plan to move to a one world government is out in plain sight.
UN.................................
Dems don’t need to pack the courts or eliminate the filibuster due to bipartisan support for most of the progressive agenda.
They’ll call it an agreement and the GOP Senate will grease it like they did for Obama’s “Iran nuclear agreement.” Guaranteed.
We’ve concentrated too much power in the White House over the years.
= = =
But we’ve diluted the brains.
As established in 2020.
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