Republicans threaten to sink Biden’s G7-backed plan to fix global tax system

Joe Biden’s plans to overhaul the international tax system face mounting opposition from his Republican opposition who have called the proposals “crazy” and are threatening to block the historic deal’s passage in the US.

The treasury secretary, Janet Yellen, has led the Biden administration’s attempts to broker a global agreement on how companies are taxed, which comes amid a wider push to reshape corporate taxation in the US.

Those efforts were rewarded over the weekend when the G7 group of wealthy nations backed a global minimum rate of at least 15% and agreed that countries should be able to tax some of the profits made by big companies based on the revenue they generate in that country, rather than where they are based for tax purposes.

But as Biden heads to London for the G7 summit, the US-led plan faces stiff opposition in Washington, where senior Republicans are lining up to kill the deal. The former Trump administration economic adviser Kevin Hassett told Yahoo Finance on Tuesday it “isn’t going to happen”.

With the 100-seat Senate evenly split between Democrats and Republicans, Biden will struggle to pass any changes to international tax treaties with bipartisan support and may be forced to try to pass a bill with only Democratic votes.

Pat Toomey, a Republican senator from Pennsylvania, has called the global minimum tax “crazy”.

“Certainly the whole fact that they had to try to persuade all these other countries to make sure they raise their taxes is a confession of the damage we’re doing to our own country,” Toomey said. “They certainly wouldn’t have the votes to approve a treaty of this kind that they’re contemplating.”

The Republican Senator John Barrasso of Wyoming, the chair of the Senate Republican Conference, called the plan “anti-competitive, anti-US, and harmful for us as we try to continue to grow the economy at a time when we’re coming out of a pandemic”.

Hassett told Yahoo Finance: “The G7 has no authority over this. For the EU to do something, they basically need unanimity, and there’s no way to rush that.

“For the US, there’s a big question whether it would pass, あまりにも, because if you analyze it, basically what we’re doing is giving foreign countries a hunting license to get revenue from US firms that they couldn’t get before.”

The agreement comes as the Biden administration attempts to raise US corporate taxes from 21% に 28%. A rise in global rates is seen as key to ensuring that US companies do not opt to move operations offshore when rates rise.

In exchange, G7 countries have agreed to end digital services taxes on US tech companies that have led to threats by the Biden administration to impose retaliatory tariffs on a range of goods from countries including the UK, イタリア, スペイン, Turkey and India.

International negotiations over the treaty are likely to be long and complex. Britain is seeking to exclude the City of London’s financial services companies from the global tax overhaul.

首相, リシ・スナック, is concerned that Biden’s proposal could prove to be a significant deterrent to banks running many of their operations from London, アムステルダムへの金融取引のシフトをもたらしたBrexitの影響を悪化させる.

銀行から投資ファンドに至るまで、あらゆる形態の金融サービスかどうかは不明です。, 保険会社とヘッジファンド–まだ交渉中のプロセスで除外されます.

クリスサンガー, 会計事務所EYの世界政府およびリスク税務リーダー, 前記: 「多くの国では、金融サービスには例外があるとの想定があります。. 問題は、これらの例外がもたらす複雑さをすべて排除して、これらの例外をどのように管理するかということです。」

スナックは賞賛しました tax agreement as “historic” when G7 finance ministers agreed the framework on Saturday, 「最大の多国籍ハイテク巨人が英国で公正な税負担を支払うことを余儀なくされる」と付け加えた。.

しかしながら, 取引にはギャップが残っています, 重要な詳細は、中国を含むより広範なG20グループの国々の間でまだ打ち出されていません。, インドとブラジル–来月のヴェネツィアでの会議. その後、変更はの間で交渉されます 139 経済協力開発機構が監督するプロセスにある国々, 10月までに最終合意に達することを目指して.

Yellen has called the weekend agreement “historic” and said it would “end the race to the bottom in corporate taxation and ensure fairness for the middle class and working people in the US around the world”.