President Joe Biden may have pushed some of the world’s largest economies to raise taxes on big business, but the US Congress will find it very difficult to agree.
White House Press Secretary Jen Zhaki on Friday said the leaders of the seven groups – including the UK, France, Canada, Germany, Italy and Japan – agree with Joe Biden to impose at least 15% larger global minimum taxes. The G7 leaders, who attended a three-day summit in the UK, said their finance ministers had approved a global minimum tax earlier this month.
“America is mobilizing the world so that the big multinationals can play their fair share so we can invest our middle class at home,” Jack Sullivan, the president’s national security adviser, said on Twitter on Friday.
We need to end a minimum tax on corporate taxation, which has led multinational corporations to register their profits in countries with lower tax rates. This allows them to avoid taxes on their income and encourages countries to reduce tax rates. The minimum rate will make it harder for businesses to avoid taxes and may change the digital service tax that many European countries impose on U.S. technology companies.
Biden management officials believe the use of foreign tax havens has encouraged companies to invest in the country, to the detriment of the middle class. The President hopes that the G7’s approval will encourage the acquisition of members of the Group of Twenty (G20).
This Agreement is not a Fact Agreement because these Terms must be ratified by the Organization for Economic Co-operation and Development (OECD) and implemented individually. U.S. His own plans for tax hikes The president needs other countries to support a global minimum tax to ensure it does not affect businesses.
Thornton Mattson, a senior researcher at the Center for Tax Policy, said: “It has the potential to put a stop to racing. This will be a big change in the way things are being done in corporate tax matters over the last three decades. ”
The idea of a higher global minimum tax is also part of Joe Biden’s national agenda, but it is facing opposition in Congress.
The president has recommended the use of a global minimum tax to fund his broader infrastructure program. Its budget proposal is estimated to raise nearly $ 34,534 billion over 10 years, but Republicans say the U.S. They say changes in the tax code will make the country less competitive in the world economy.
Treasury Secretary Janet Yellen presented the deal as a fundamental justification after a meeting of finance ministers.
“We need to have sustainable tax systems that can generate enough income to invest in essential public goods and respond to crises and ensure that all citizens and businesses share equally the financial burden on the government,” he said.
Strong opposition from Republicans
Kevin Brady, a Texas Representative from the House of Commons on the House Tax Committee, said GOP lawmakers will fight tooth and nail against the tax. Republicans see lower taxes as a way to encourage businesses to invest and hire, giving some weight to Joe Biden’s argument that improved infrastructure and better trained workers will help boost growth.
“It’s an economic surrender,” Kevin Brady said Friday. President Biden has succeeded in doing the impossible – it is more advantageous to be a foreign company and a foreign worker than he is an American company and an American worker. “
Mitch McConnell, Senate President of the Republic of Kentucky, has repeatedly stated that his party will oppose any move to reverse the 2017 tax cuts announced by President Donald Trump.
The 2017 restructuring created a new way of taxing foreign corporate profits, and Democrats in Congress said the structure would encourage companies to invest abroad rather than in their own country.
Joe Biden proposed raising the rate to 21%, among other changes to the index. Management considers the G7 to be a platform rather than a ceiling of 15% for fees. But the G7 plan differs from what Joe Biden proposed and the details are yet to be finalized, with tax experts saying there appear to be discrepancies in the rates and treatment of assets such as buildings and equipment.
Democrats want to consider all the best print and details before giving their full approval to exit the G7, and Joe Biden should try to win over the American electorate and their representatives.
Ron Wheaton, chairman of the Senate Finance Committee of Oregon, supports the general idea of a global minimum tax. But Ron Wyden said in a statement with Richard Neal, chairman of Massachusetts’ House finance committee, that they should carefully reconsider the deal to see if Americans really benefit.
“We are confident of the possibility of reaching a strong multilateral agreement to harmonize our international tax rules, end the race and end the tax on digital services,” the two Democrats said. “We look forward to working with management and evaluating the outcome of these negotiations for American workers, businesses and taxpayers,” they added.