Republican Missouri Rep. Jason Smith, who chairs the House Ways and Means Committee, objected to President Joe Biden’s global tax deal Friday, claiming it “manifestly harms” American interests.
Rep. Smith wrote a letter to the Organization for Economic Co-operation and Development (OECD), an international economic organization, about his concerns with Biden’s global tax agreement. Smith claims in the letter that the Under Taxed Profits Rule (UTPR) supported by the OECD will harm American business interests in favor of foreign adversaries. (RELATED: Citing ‘Outrageous’ Big Oil Profits, Biden Calls For Quadrupling Tax On ‘Corporate Stock Buybacks’)
New from me: Jason Smith is decidedly not a fan of the OECD tax deal, warning of potential tax and trade countermeasures. Tricky road ahead. https://t.co/VtYt3cCaiZ
— Richard Rubin (@RichardRubinDC) February 10, 2023
“This UTPR surtax is fundamentally flawed-and it will never be effective against companies backed by the Chinese Communist Party,” Smith wrote. “Instead, the UTPR surtax will target important U.S. tax incentives-including the research and development tax credit-as well as the operations of American companies in third-party jurisdictions.”
The UTPR permits countries to raise taxes on subsidiaries of a larger global company paying less than the proposed 15% global minimum tax in a different location, according to the Tax Foundation. It is part of an OECD plan to crack down on tax avoidance by large corporations by limiting global tax competition and changing where companies pay taxes.
In Oct. 2021, more than 130 nations reached an agreement to implement a 15% global minimum tax beginning in 2023. U.S. companies operating in foreign nations will be impacted by a higher global minimum tax, even if Congress does not pass the new tax, The Wall Street Journal reported.
The Biden administration pushed for Congress to adopt the OECD’s global minimum tax when Democrats held the House and Senate. Congress ended up creating a different 15% global minimum tax, an increase from the 10.5% global tax enacted under President Donald Trump.
“The United States provides 20 percent of the OECD’s annual budget-nearly $80 million per year and twice as much as any other country. China provides no funding to the OECD,” Smith noted in his letter. “Yet China stands to gain market share and jobs, while Americans are expected to pay the tab for the OECD global tax deal. It is unclear why American taxpayers should continue funding a project that manifestly harms their own interests in favor of a competitor.”