Yellen is giving away the farm through global tax scheme   

Behind the closed doors of the Organisation for Economic Co-operation and Development (OECD), the Biden administration has been negotiating a global minimum tax deal without input from Congress. If allowed to continue, this deal will have negative impacts on our economy, causing significant harm to the American people.  

For decades, many countries around the world have been concerned that businesses gamed the system by shifting their profits to low-tax jurisdictions, minimizing their overall tax burden. Because of this, these countries, including the U.S., came together at the OECD to discuss ideas about how to prevent profit shifting and erosion of the tax base. 

These conversations were front of mind when Republicans in Congress passed the Tax Cuts and Jobs Act (TCJA) in 2017. We recognized that U.S. multinational companies were using aggressive tax planning to minimize their tax burden. As such, we did the hard work of completely overhauling our tax code to prevent our companies from leaving the United States while more accurately collecting the taxes due to the U.S. Treasury. By all accounts, TCJA has been a success on this front: we prevented companies from headquartering overseas, our corporate tax revenue has increased, and millions of jobs were created. There has not been a single major inversion since TCJA’s passage. 

In the meantime, the OECD continued its discussions and negotiations, concluding that all countries must institute a minimum tax for their companies. During negotiations, the Biden administration and Treasury Secretary Janet Yellen unilaterally decided that implementing a global minimum tax was more important than protecting the sovereignty of the U.S. and the competitiveness of our economy. At every turn, damaging concessions were given by Secretary Yellen to keep the deal alive. Our newly reformed (and successful) tax code has been disqualified. Primary taxing rights on our businesses have been given to foreign countries. Business tax credits that promote research and development and make American companies competitive don’t count any longer.  

It would be understandable if America had received anything in return for these concessions, but we have not. The explanation for giving away the farm is that it will create a “stable international tax system.” But in reality this is just a euphemism for allowing foreign nations to take our tax revenue and giving special carve-outs to countries like China and India — the Biden administration has even admitted as much.  

This will result in fewer jobs and less economic opportunity for millions of American families. Under the Treasury/OECD plan, there will be a drastic impact on U.S. companies operating overseas, with some U.S. companies being double or triple-taxed. This will cause lower tax revenue for the U.S., job losses for our workers, and decreased investment in the U.S. 

Additionally, this deal will ultimately destabilize and complicate our relationships overseas. There are provisions of the deal that violate international tax treaties. This will cause decades of litigation to occur between countries, with businesses and U.S. consumers being caught in the crossfire.  

If the Biden administration has their way, it would be the biggest economic capitulation in American history. Instead, their slogan “stable tax system” could create the greatest race to the bottom the world has ever seen. Countries will use loopholes to fight for special carve-outs, which our own country refuses to do for Americans. This will make starting a business in America to compete overseas even more difficult than it already is.  

The worst part of this global tax scheme is that Treasury is trying to force Congress into a corner so that changes to our tax code are made to align with this deal. However, the opposite is true: Congress will not change the tax code on the basis of a political deal. I am working closely with House Ways and Means Chairman Jason Smith to introduce legislation to prevent any country from attempting to implement this scheme on U.S. companies. 

I can say with certainty that my colleagues on Ways and Means will not be bullied into changing the U.S. tax code, and that we expect the administration to defend the interests of America and our citizens. 

Ron Estes, one of only a handful of engineers in Congress, worked in the aerospace, energy and manufacturing sectors before representing Kansas’ 4th District since 2017. He is a fifth-generation Kansan, former state treasurer, and serves on the House Committee on Ways and Means, Budget Committee, and Education and the Workforce Committee.