Republicans on the U.S. House Ways and Means Committee introduced legislation that would cancel the countries involvement in the Organization for Economic Co-operation and Development (OECD) global tax proposal.
The Defending American Jobs and Investment Act would also create reciprocal taxes applicable to any foreign country that decides to target Americans with unfair taxes under the OECD’s global minimum tax. The Joint Committee on Taxation (JCT) conducted an analysis that found that the United States would lose over $120 billion in tax revenues under the OECD’s global minimum tax plan.
Further, the bill would require the Treasury Department to identify extraterritorial taxes and discriminatory taxes enacted by foreign countries that attack U.S. businesses, such as the UTPR surtax.
After the unfair foreign taxes have been identified, the tax rates on U.S. income of wealthy investors and corporations in those foreign countries will increase by 5 percentage points each year for four years, after which the tax rates remain elevated by 20 percentage points while the unfair taxes are in effect.
Further, the reciprocal tax ceases to apply after a foreign country repeals its extraterritorial and discriminatory taxes. The reciprocal tax will remain dormant as long as countries avoid any unfair taxes on U.S. businesses and workers.
“One of the Trump Administration’s first actions was to reject the OECD framework that would have destroyed U.S. jobs, forfeited an estimated $120 billion in tax revenues, and enhanced China’s competitive advantage. The Defending American Jobs and Investment Act will ensure that President Trump has every tool at his disposal to pushback against any foreign country that seeks to undermine America’s economic vitality or unfairly target our workers and businesses,” House Ways and Means Committee Chairman Rep. Jason Smith (R-MO) said.
The legislation follows an executive order by Trump to cancel U.S. involvement in the OECD global tax plan.