Kelly: "Congress must ensure the Biden Administration puts Americans First"

WASHINGTON, D.C. -- During a Ways & Means Tax Subcommittee hearing on Thursday, U.S. Rep. Mike Kelly (R-PA), Chairman of the Ways & Means Subcommittee on Tax, called on the Biden Administration to revisit the negotiation with the Organization for Economic Co-operation and Development’s (OECD) on the Pillar 1 deal. These negotiations include the elimination of the digital service tax with the intention of establishing a fair global playing field. If Pillar 1 is enacted, this tax burden will fall disproportionally on American companies.

The United States produces 24 percent of global economic output, yet 48 percent of companies in scope under OECD Pillar 1 are American and U.S. employers represent 64 percent of profits to be reallocated.

"The Biden Treasury Department has worked with OECD and foreign governments to craft this Pillar 1 proposal – instead of with the legislative body which represents the Americans that will have to pay for this deal. And in my eyes – the worst part of this negotiation is Treasury’s complete lack of cooperation with Congress on OECD Pillar 1," Rep. Kelly said in prepared remarks. "The Biden Administration leapfrogged Congress and put the interests of foreign governments ahead of the concerns of the men and women elected to represent American taxpayers.  We will do our due diligence to protect American companies and consumers and ensure they get a good deal."

You can watch today's hearing HERE.

BACKGROUND

In 2021, the Biden Administration announced the beginning of OECD negotiations for a global minimum tax. OECD includes 145 countries around the world, including the United States. The Biden Treasury Department led these negotiations without frequent and significant input from Congress. A two-thirds majority is required in the U.S. Senate for enactment for Pillar 1.

Previously, U.S. Treasury Secretary Janet Yellen acknowledged, if enacted, Pillar 1 would reduce U.S. tax revenues. Through the Pillar 1 negotiations, U.S. companies would bear far more than the fair share out of the 145 countries involved, confirmed by this week’s Joint Committee on Taxation estimates. More specifically, if Pillar 1 would have been in place in 2021, the U.S. would have lost $1.4 billion in revenue.

In July 2023, Rep. Kelly chaired a Tax Subcommittee hearing examining the impact of OECD's Pillar 2 on the United States. In June 2023, it was announced that the United States stands to lose over $120 billion in tax revenues under the Organization for Economic Co-operation and Development’s (OECD) global minimum tax – known as Pillar 2 – negotiated by the Biden Administration, according to an analysis by the Joint Committee on Taxation (JCT).