Missouri Representative and Republican Jason Smith, who chairs the House Ways and Means Committee, expressed his objections to President Biden’s global tax agreement on Friday. In a letter addressed to the Organization for Economic Co-operation and Development (OECD), Smith claimed that the OECD’s support for the Under Taxed Profits Rule (UTPR) would harm American business interests in comparison to those of foreign competitors.
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
The UTPR is a component of the OECD’s effort to restrict worldwide tax competition and alter the way companies pay taxes. The objective is to allow countries to increase taxes on subsidiary companies of a larger global firm that pays less than the recommended 15% global minimum tax in a different location. This agreement was established by more than 130 nations in October 2021 and will affect US companies operating overseas, even if the US Congress fails to approve the new tax, as they will be subjected to a higher global minimum tax.
The Biden administration advocated for Congress to adopt the OECD’s global minimum tax proposal when Democrats were in control of both the House and Senate. This resulted in a 15% global minimum tax, an increase from the 10.5% global tax established under former President Donald Trump. In his letter, Smith pointed out that the US contributes 20% of the OECD’s yearly budget, approximately $80 million annually, while China provides no financial support to the organization. He claimed that it is unjust for American taxpayers to fund a scheme that would disproportionately benefit foreign competitors over their own country.
In his letter, Smith concluded by asserting that the UTPR surtax is fundamentally flawed and will never succeed in targeting companies supported by the Chinese Communist Party. He maintained that the UTPR surtax will instead impact crucial US tax incentives, such as the research and development tax credit, as well as the activities of American companies in third-party nations.
Overall, Rep. Jason Smith has expressed his disapproval of President Joe Biden’s global tax deal, claiming that it “manifestly harms” American interests. He argued that the UTPR surtax will target important US tax incentives while benefiting foreign adversaries more than American businesses. Smith concluded his letter by questioning why American taxpayers should continue funding a project that would benefit their competitors more than themselves.
The preceding article is a summary of an article that originally appeared on The Daily Caller