U.S. Republicans vow to oppose Yellen's G7 tax deal, casting doubt on
its future
Send a link to a friend
[June 08, 2021] By
David Morgan and David Lawder
WASHINGTON (Reuters) - Several top U.S.
Senate Republicans on Monday rejected Treasury Secretary Janet Yellen's
G7 deal to impose a global minimum corporate tax and allow more
countries to tax big multinational firms, raising questions about the
U.S. ability to implement a broader global agreement.
The opposition from Republicans may push President Joe Biden to attempt
to use budget procedures to pass the initiatives with only Democratic
votes.
It left lawyers and tax experts in Washington wondering whether it could
get done without crafting a new international treaty, which requires
approval by a two-thirds majority in the evenly split 100-member Senate.
"It's wrong for the United States," Republican Senator John Barrasso
said of the tax deal struck on Saturday by finance ministers from the G7
wealthy democracies.
![](http://archives.lincolndailynews.com/2021/Jun/08/images/ads/current/rohlfs_lda_072017.png)
"I think it's going to be anti-competitive, anti-U.S., harmful for us as
we try to continue to grow the economy and certainly at a time when
we're coming out of a pandemic," Barrasso, who chairs the Senate
Republican Conference, told reporters at the U.S. Capitol.
In the landmark agreement, G7 finance ministers agreed to pursue a
global minimum tax rate of at least 15% and to allow market countries to
tax up to 20% of the excess profits - above a 10% margin - of around 100
large, high-profit companies.
Yellen said the "significant, unprecedented commitment" would end what
she called a race to the bottom on global taxation.
In exchange, G7 countries agreed to end digital services taxes, but the
timing for that is dependent on the new rules being implemented.
The deal could pave the way for broader buy-in by G20 countries and some
140 economies participating in international negotiations over how to
tax large technology firms such as Alphabet Inc's Google, Facebook Inc,
Amazon.com Inc and Apple Inc. All are expected to be included in the
new, broader mechanism, which is targeted for a final international
agreement in October.
Republican Senator Pat Toomey said the deal would drain tax revenues
away from the U.S. Treasury to other countries, adding that he hoped
some Democrats would be unwilling "to subject the American economy to
this kind of misery."
[to top of second column] |
![](../images/060821PICS/busine37.jpg)
U.S. Treasury Secretary Janet Yellen speaks during a news
conference, after attending the G7 finance ministers meeting, at
Winfield House in London, Britain June 5, 2021. Justin Tallis/Pool
via REUTERS
![](http://archives.lincolndailynews.com/2021/Jun/08/images/ads/current/graue_21ENCLAVE_060721.png)
"There will be no Republican support for this, and they'll have to do this on a
party-line vote. That needs to fail," Toomey told Fox Business Network.
TREATY OR NOT
Daniel Bunn, an international tax expert at the Tax Foundation, a right-leaning
think tank in Washington, said he believed that establishing new taxing rights
on 100 multinational firms would require a new tax treaty.
The U.S. Constitution gives the president the right to make international
treaties "if two-thirds of Senators present concur." U.S. participation in some
international treaties has been hampered by domestic partisan divides, in which
a president approves the deals but they are not ratified by Congress.
Manal Corwin, head of KPMG's Washington National Tax Practice and a former U.S.
Treasury official, said Yellen's G7 deal could be done through legislation that
overrides existing bilateral tax treaties - using a simple majority as part of
budget reconciliation procedures.
With Vice President Kamala Harris as the tiebreaking vote, Democrats control 51
votes in the Senate, but cannot afford to lose any Democratic votes.
Senator Ron Wyden, asked how much can be done with the budget reconciliation
procedures and what would require a super-majority vote, said: "Those are all
questions that lawyers are now immersed in."
Wyden, who chairs the tax-writing Senate Finance Committee, told reporters that
deterring the use of tax-haven countries and ensuring minimum levels of
corporate taxation were "in the long-term interest of American workers."
"There’s a lot of heavy lifting to do here," Wyden added. "It’s going to take a
number of months, that’s for sure."
![](http://archives.lincolndailynews.com/2016/Aug/26/images/ads/current/ldn_business_directory_small2_2016.png)
Toomey, who sits on the Finance Committee, said he believed Democrats could push
through the tax changes with only Democratic votes, without a treaty, but added
that would require the United States to "surrender" and agree not to oppose
changes imposed by other countries.
(Reporting by David Lawder and David Morgan in Washington; Additional reporting
by Jarrett Renshaw; Editing by Heather Timmons and Peter Cooney)
[© 2021 Thomson Reuters. All rights
reserved.] Copyright 2021 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
Thompson Reuters is solely responsible for this content. |