Diving letter:
- The chairman of the Senate Finance Committee, Ron Wyden (D-Ore.) And two other Democrats on the panel are looking Legislative support This would increase corporate taxes on foreign profits and help pay President Biden's proposed $ 3.5 trillion economic spending package.
- The bill is in line with the goals of a corporate tax plan by the Biden administration and aims to move investment and job creation from overseas to the United States Revision of three provisions in the Trump administration's 2017 tax amendments.
- "The revision of international tax law is central to our efforts to restore fairness and fund key investments such as paid vacation and the expanded child tax credit – social security for our children," said Wyden in a statement. “The Republican tax bill was a massive giveaway for mega-corporations, and corporate tax revenues have fallen nearly 40% since Trump's amendments were passed in 2017.
Dive Insight:
President Biden has proposed increasing taxes on businesses and wealthy individuals to fund spending on programs such as health, education, paid vacation, childcare and climate protection.
Biden would raise the corporate tax rate from 21% to 28%, introduce a minimum tax of 15% for companies with incomes greater than $ 2 billion, and impose a 21% levy on offshore profits.
In June, Treasury Secretary Janet Yellen secured an agreement from 130 countries on a global minimum corporate tax of 15% to end “international tax competition” and curb billions in tax avoidance.
According to the White House, large US corporations report 60% of foreign profits in seven low-tax areas, which account for less than 4% of global gross domestic product.
Corporate groups have criticized Wyden's foreign tax changes since April when he broadly outlined his joint proposal with two other Democrats on the Finance Committee – Mark Warner of Virginia and Sherrod Brown of Ohio.
The legislation "would raise taxes on American companies rather than their competitors, distorting the playing field against our companies, jeopardizing American employment growth, and making the United States less competitive with China and others," the Pace Coalition said in a statement.
"Any further increase in taxes that are only paid by American companies will put them at a greater disadvantage worldwide – also vis-à-vis Chinese state-owned companies," said the coalition Business Roundtable, National Association of Manufacturers, National Foreign Trade Council and U.S. Chamber of Commerce.
Like Biden's proposed foreign tax changes, the Wyden Plan focuses on three provisions of applicable law.
Wyden would raise the global low intangible tax rate (GILTI) while moving it to a country-specific system that prevents companies from shielding income in foreign tax havens. He would change the Foreign Intangible Income (FDII) provision to prevent factories from being offshored and to stimulate research and development and other innovations in the US.
Wyden would also change the Tax Base and Abuse Tax (BEAT) by restoring the full value of tax credits on business investments made in the United States.
"We will reward companies that invest in the US," he said. He asked for it public comment on his proposal by September 3rd.
"We need a system that encourages companies here in the US to invest in cutting-edge research and development, domestic manufacturing and training American workers for the quality jobs of the future," Warner said in a statement. "Unfortunately, the Tax Act of 2017 set incentives that do the opposite and encourage companies to offshore activities and jobs."
Passing the bill faces hurdles as Republicans are expected to stay united in the opposition, leaving Democrats to pass it by a slim majority on a line-by-line vote.