U.S. Senators Urge Adoption of Key Biden International Tax Reforms
Senators submit ideas to ensure greater fairness in our international tax system, boost the competitiveness of American workers and domestic businesses
WASHINGTON, DC – Today, U.S. Senators Sheldon Whitehouse (D-RI), Dick Durbin (D-IL), Chris Van Hollen (D-MD), Elizabeth Warren (D-MA), and Jack Reed (D-RI) responded to an invitation to comment on the draft plan authored by Senate Finance Committee Chairman Ron Wyden (D-OR) and Senators Sherrod Brown (D-OH) and Mark Warner (D-VA) to overhaul the U.S. system for international taxation. The drafters sought feedback on key questions that will determine the legislation’s effectiveness. The senators call to follow the lead of President Biden, whose proposal would create a fairer international tax system that levels the playing field for American workers and domestic businesses that compete with major multinationals. They also point to the considerable revenue their ideas would generate to help pay for President Biden’s Build Back Better plan.
“Fixing our international tax system will provide a major source of revenue to finance President Biden’s Build Back Better plan to create an economy that works for everyone,” the senators write. “But its importance goes beyond raising revenue. Strong international tax reform will make our tax code fairer for and improve the competitiveness of American workers and domestic businesses. We look forward to working with you to ensure this legislation fulfills its promise, and offer the comments below.”
Wyden, Brown, and Warner released a framework for international tax reform in April and followed with a more substantial discussion draft in late August. The three senators requested comments on their proposal be submitted by September 3.
In their letter, Whitehouse, Durbin, Van Hollen, Warren, and Reed name several ways to ensure the draft fulfills its promise, including:
- A rate on foreign profits (GILTI) that is no lower than what President Biden proposed, but ideally equals the domestic tax rate, to reverse incentives for companies to shift profits and outsource jobs overseas.
- Reforms to address flaws in the Trump tax law’s Base Erosion and Anti-Abuse Tax (BEAT) provision, which fails to encourage countries that have not joined the global tax deal to do so.
- Repeal of the new tax break created by the Trump tax law known as Foreign Derived Intangible Income (FDII), which encourages large multinationals to locate assets like plants and equipment offshore.
- Reforms to prevent “inversions,” where companies renounce their U.S. citizenship to avoid taxes.
- Combating earnings stripping by restricting the interest deduction for multinational enterprises with excess domestic indebtedness.
- Requiring public disclosure of profits, taxes, employees, and tangible assets to the IRS, which would allow investors to access this important information and enable policymakers and the public to evaluate the efficacy of our international tax laws.
Read the senators’ full comment here.