WASHINGTON – Senator Ron Wyden, the Oregon Democrat in charge of drafting tax laws, will release a new plan on Monday to revise the way the United States tax multinational corporations. This could be a blueprint for how lawmakers will fund President Biden’s infrastructure plan.
The proposal could raise hundreds of billions of dollars from companies operating across international borders, according to analysis of similar proposals by Congressional scorekeepers. Senators Sherrod Brown from Ohio and Mark Warner from Virginia, both Democrats, were hired as co-authors.
In addition to increasing revenue, the plan is intended to discourage companies from relocating profits and jobs to low-tax countries in order to avoid paying taxes in the US. The tax code also creates new incentives for companies to invest in research and production in the country.
The proposal would streamline various aspects of the 2017 tax bill signed by President Donald J. Trump, creating a number of new mechanisms for the United States to tax multinational corporations. This would increase the tax rate of a global minimum tax that was included in this legislation and change the way it is applied to income earned by businesses in various overseas countries. It would also amend two other parts of the 2017 bill to have Senators say it would better encourage investment in America.
These measures reflect the ambitions of the Biden government with regard to international taxation. Separately, Treasury Secretary Janet L. Yellen on Monday called for global coordination of an international tax rate that would apply to multinational corporations regardless of where they are headquartered. Such a global tax could help prevent the kind of “race to the bottom,” Ms. Yellen said, referring to countries trying to outdo each other by lowering tax rates to attract businesses.
“Competitiveness is not just about how US-based companies hold up against other companies in global merger and acquisition bids,” said Yellen. “The point is to ensure that governments have stable tax systems that generate sufficient income to invest in essential public goods and respond to crises, and that all citizens share the burden of funding government fairly.”
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April 5, 2021, 1:17 p.m. ET
Last week, Mr Biden suggested spending $ 2 trillion on an infrastructure package funded over 15 years through higher corporate taxes. These include increasing the corporate tax rate from 21 percent to 28 percent and a number of changes in international tax rates.
On Monday, Mr Biden continued to push for these tax hikes, saying that companies should pay their fair share and that there was “no evidence” of Republicans’ concern that a tax hike would drive investments out of the United States.
“You’re talking about companies in the Fortune 500 that haven’t paid a cent in taxes in three years. Come on man, ”he said.
The president is expected to spend up to $ 2 trillion more later this month on education, healthcare, and other spending initiatives, much of which will be funded through tax hikes for high-income people. Mr. Biden’s advisors have estimated that his international tax proposals could raise more than $ 600 billion in 10 years.
In a press release, Wyden said the Senator’s tax plan would “not only generate critical revenue to pay for President Biden’s infrastructure package,” but also “encourage additional investment in the United States and its workers.”
The Senate drafters do not specify the exact new tax rates associated with their plan or how much additional tax revenue it would generate. Instead, they wait and set tax rates to match Democrats’ spending ambitions later this year. “I’m going to start by introducing specific suggestions so people have ideas on how to go about it,” Wyden said in an interview last month.
The presence of Mr. Brown, one of the most progressive Democrats in the Senate on taxation, and the more centrist Mr. Warner as co-authors suggests that the Wyden Plan could find widespread support in a Democratic caucus that most likely cannot afford to lose one only vote for Mr. Biden’s infrastructure plan.
Mr Brown said in a statement on the plan that “businesses should pay their fair share, just like families in Ohio, and that they should not receive tax breaks for the work of shipping workers overseas.”
Mr. Warner argued that the proposal would provide an incentive to invest in the United States: “We need an international tax system that rewards companies that invest here in the US, particularly in cutting edge technologies that determine the future success of our businesses, profitability and capability to create well-paying jobs. “