There’s still time to stop Biden’s global minimum tax grab

Here at home, the Joe Biden White House has been lobbying federal lawmakers to impose trillions of dollars in higher taxes and wasteful, “woke” spending that will make the growing inflation problem even worse.

At the international level, the Biden agenda also calls for higher taxes on Americans. The Biden administration has been working with foreign governments to set a global minimum tax rate on American businesses.  

Why collude with our competitors to keep taxes on American businesses high? It does nothing to help American taxpayers, workers or, small businesses. This huge concession sets the stage for a global tax regime that rigs the system in favor of bigger government.

The proposed changes to the international tax rules contain two parts or “pillars.” Pillar one would allow other nations to tax American businesses in ways that today’s rules forbid. The United States would be one of the biggest losers when it comes to the effects of pillar one because it would give foreign governments the power to further raise taxes on American companies. 

Pillar two would require each country to keep their business taxes at 15 percent or higher. A cartel of tax collectors like OPEC was for oil prices. One can imagine how the opening bid of 15 percent will increase year after year. 

Treasury Secretary Janet Yellen has said this agreement will stop nations from competing by keeping taxes low. The United States will have to compete with China and Bangladesh by reducing wages. Limited wages rather than a limited cost of government.

This is just another tax grab by leftist, big-government politicians. Foreign governments. Empowered by Biden.

This agreement would surrender American tax sovereignty to foreign bureaucrats. There is every reason to believe foreign countries — especially geopolitical rivals like Russia and China — will not play by the rules. Many of these countries have non-transparent economies and state-run companies and could easily claim to enforce a 15 percent minimum tax while avoiding actual participation.

When our European competitors began pushing the global minimum tax agreement, Chinese media urged the Chinese Communist party to respond by cutting taxes in order to attract more investment and bolster domestic manufacturing.

Foreign countries routinely fight America over trade access and barriers and take steps to protect domestic farmers and manufacturers. There is no reason to think the same dynamics would not occur regarding the global minimum tax and countries would not take steps that protect or provide an advantage to their workers and companies.

Other world leaders will likely refuse to follow President Biden in locking in high tax rates in their countries given the uncertainty around the global economy.

There are many benefits this agreement would provide for big government statists but little or nothing that will help U.S. workers and businesses.

American lawmakers can stop this agreement as the Biden administration cannot sign bring the U.S. into compliance with the agreement all by himself.

The Democrats’ socialist tax-and-spend bill needs to be passed in order for the U.S. to have a 15 percent minimum tax. Not only will businesses see higher taxes, but the proposal would also require businesses to calculate this new tax on a country-by-country basis, rather than a worldwide basis. This change would create significant tax complexity and uncertainty for businesses operating overseas.

However, this agreement has the opposition of every Republican in Congress and Sen.Joe Manchin (D-W.Va.) has so far been unwilling to support the legislation.

In addition, the agreement requires modifying the dozens of existing bilateral tax treaties that were ratified by Congress, which requires 67 votes in the Senate. This means that Republican lawmakers have the ability to block key parts of this agreement.

Therefore, we have some breathing room. There is a real opportunity for pro-growth low-tax Republicans to emphasize their commitment to tax competition rather than tax “harmonization.”

It will allow a clear contrast between the two political parties. On the one hand, Republicans will support lower taxes that help working families and small businesses. On the other, Biden and congressional Democrats are pushing trillions in higher taxes in the U.S. and want to lock in high taxes overseas on American workers through the so-called global minimum tax agreement.

Grover Norquist is the president of Americans for Tax Reform.