Global Daily Tax News, US Republicans Renew Opposition To Pillar Two Deal, (Sep 20, 2024)

Republican lawmakers have decried the OECD's Pillar Two framework, in a publicly released letter to OECD Secretary-General Mathias Cormann.

The lawmakers said, "The Biden-Harris Administration's collusion with foreign governments of the Organization for Economic Co-operation and Development (OECD) to impose a global minimum tax on US businesses – including subjecting US employers to a new undertaxed profits rule (UTPR) – surrenders US sovereignty and economic competitiveness, forfeits over USD100bn in tax revenue, and violates Constitutional principles by attempting to coerce Congress to implement a deal that the Administration has no authority to implement."

The letter is signed by House Speaker Mike Johnson (LA-04), House Majority Leader Steve Scalise (LA-01), House Majority Whip Tom Emmer (MN-06), House Republican Conference Chair Elise Stefanik (NY-21), and Ways and Means Committee Chairman Jason Smith (MO-08) along with every Republican on the House Ways and Means Committee.

The letter begins: "One year ago, a congressional delegation led by Members of the US House Committee on Ways and Means traveled to Paris to make clear to the Organization for Economic Cooperation and Development that the US Congress will not consent to the global tax deal unilaterally negotiated by the Biden-Harris administration. We write today to renew our objections and express support for a lawsuit filed by the American Free Enterprise Chamber of Commerce in the Belgian Constitutional Court challenging the undertaxed profits rule (UTPR), which would surrender US tax sovereignty, allowing unelected foreign bureaucrats to dictate tax policy, and help foreign governments arbitrarily extract hundreds of billions of dollars from the US economy."

The lawmakers later add: "China will exploit the OECD global tax deal's loophole for direct government subsidies, which are a hallmark of Chinese economic activity. Other countries will likely do the same, thwarting the OECD's stated purpose of ensuring a minimum level of taxation. Ultimately, the UTPR will target US workers and businesses by allowing foreign governments to claw back important US tax incentives (for example, tax credits for research and development and low-income housing) and attack the operations of American companies in third-party jurisdictions."