Rep. Kelly in Ways & Means Tax Subcommittee Hearing: "The bottom-line is the deck is stacked against America at the OECD."

WASHINGTON, D.C. -- On Wednesday, U.S. Rep. Mike Kelly (R-PA), Chairman of the Ways & Means Committee's Subcommittee on Tax, chaired a hearing titled "Biden’s Global Tax Surrender Harms American Workers and Our Economy." The hearing addressed recent news 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, what Rep. Kelly called a poorly negotiated by the Biden Administration.

You can watch Rep. Kelly's opening statement and full committee hearing here.

"The original idea of engaging in negotiations at the OECD was this: other countries could join the U.S. with their own global minimum taxes and we could stop the proliferation of (Digital Services Taxes). Unfortunately, that’s not what happened at all," Rep. Kelly said in prepared remarks. "Sixty percent of the revenue divided up under the Pillar 1 agreement would come from US firms. Sixty percent! Our own Treasury Department acknowledges that about 50 percent of the firms subject to the Pillar 1 agreement would be U.S. companies. The bottom-line is the deck is stacked against America at the OECD."
 

BACKGROUND

In June, 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). The analysis was requested by Senate Finance Committee Ranking Member Mike Crapo (R-Idaho) and House Ways and Means Committee Chairman Jason Smith (R-Missouri).

JCT considers various scenarios of adopting OECD’s global minimum tax in the United States and other countries. Under the current trajectory, JCT estimates the U.S. will lose more than $120 billion of tax revenue. Even under the scenario pushed by the Biden Administration, JCT estimates the U.S. will lose almost $60 billion. Moreover, these estimates do not even account for U.S. revenue loss from the almost 50 countries that have already enacted the tax scheme or have announced plans to do so.