05/11/21

US: GOP lawmakers say 'moronic' global tax minimum puts American businesses at a disadvantage.

As published on foxbusiness.com, Friday 5 November, 2021.

The party-defining debate between Democrats and Republicans on corporate tax rates took center stage Thursday, with GOP House lawmakers calling President Biden’s Made in America Tax Plan "moronic."

The president has said his proposal will help end the "race to the bottom" by requiring corporations to pay a 15% global minimum tax rate.

The concept, agreed to by 135 other nations, would bar large corporations from skirting taxes by offshoring profits in low-tax countries, like the Cayman Islands and Bermuda.

The Treasury Department has said tax havens have cost the U.S. tens of billions of dollars annually.

But GOP lawmakers have argued that corporate tax rates are not a fair representation of financial burdens U.S. companies face compared to businesses in competing nations.

In a GOP-led roundtable Thursday, House Minority Leader Kevin McCarthy said U.S. companies face greater economic burdens than companies in nations like China.

"It's [corporate tax] not the only thing when you talk about production," House Minority Leader Kevin McCarthy told Fox News.

"As we move more towards a Green New Deal, your costs of energy go up," he said. "When you look at the wage of an employee — ours is higher. When you look at OSHA, when you look at the mandates — all those are going to affect the bottom line."

"So when you’re a business, and you want to produce a product, and you’ve got to have a return on it, if it costs you more to produce in one country, and you can’t get a return on it, you’re going to produce it somewhere else," he added.

Democrats have argued that mandating a global minimum tax rate for multinational companies, in coordination with raising corporate tax rates from 21% to 28% for businesses stateside, will ensure companies "pay their fair share."

The Biden administration has said this tax reform could help pay for the president’s multi-trillion dollar infrastructure and social spending packages without having to raise taxes on individuals who make less than $400,000 a year.

But Rep. Byron Donalds, R-Fla., said he thinks this economic philosophy is misguided.

"I think the misconception that comes from Democrats and Joe Biden is this moronic misunderstanding of economics — that tax policy is supposed to make things fair," he said in response to questioning by Fox News Thursday.

"Tax policy’s only purpose is to raise revenue," he continued, adding tax policy needs to be "simple" and "reliable" to ensure U.S. companies can compete on a global scale.

Republicans argue taxing U.S. companies will make them less profitable and less competitive against companies in China.

But when asked by Fox News why this is, given China’s pledge to implement a 15% global minimum tax rate, McCarthy said: "China’s agreed to a lot of things they’ve never done."

The House is expected to vote on the infrastructure and social spending packages this week.