Republicans are getting cozy with a surprising ally in their fight against the Biden administration’s effort to reach a deal on a proposed global minimum tax rate of 15 percent on corporations — the nation of Hungary.
Republicans on the House Ways and Means Committee issued a statement Wednesday after a meeting with Hungarian Foreign Minister Péter Szijjártó and Hungarian Ambassador to the U.S. Szabolcs Takács, saying they’re in agreement that the global minimum tax deal isn’t in their interest.
“It is clear from our meeting with the Hungarian delegation that the Biden Administration’s heavy-handed bullying tactics to get countries to adopt the global minimum tax deal undermines tax sovereignty and would make any agreement unstable and short lived,” ranking member Kevin Brady (R-Texas) and Reps. Adrian Smith (R-Neb.) and Mike Kelly (R-Penn.) wrote.
“We share concerns over the global minimum tax harming our countries’ job creation and economic growth,” they said.
On Wednesday, Szijjártó said in Hungarian on his Facebook page that his delegation “had confirmed the professional cooperation between the Republican Party and the Hungarian government.”
“An entire line of congressmen and senators stood by Hungary when the Democratic administration suspended the bilateral tax agreement in revenge for our veto against the global minimum tax,” he added, referring to his country’s move to block the passage of the tax deal in the European Union.
The Treasury Department announced last week that it had canceled the U.S. tax treaty with Hungary.
After Poland — a recent holdout to the global deal — got on board, analysts say Hungary’s last-minute obstruction thwarted substantial efforts by Treasury Secretary Janet Yellen to get the deal done.
“Secretary Yellen put a lot on the line,” Howard Gleckman, an analyst at the Tax Policy Center in Washington, said in an interview. “She went to Europe and pushed very hard for this uniform international tax system on multinational corporations, and she got the OECD [Organization for Economic Cooperation and Development] to agree with it, and she got nearly everybody in the European Union to agree with it.”
“The Hungarians are working with the Republicans to kill this. It’s like a James Bond movie or something,“ he added. “This is actually very important. The consequences to American multinational corporations are quite significant.”
Agreement between Hungary and the GOP is based on the fact that Hungary has one of the lowest corporate tax rates in Europe at 9 percent and that Republicans have long been aligned with many segments of corporate America. The U.S. corporate tax rate is 21 percent.
“Some 1,700 U.S. companies have invested in Hungary, including 40 of the top 50 largest publicly traded firms, and momentum has stayed strong even through the pandemic, Mr. Takács said, a sign that they welcome the country’s mix of fiscal restraint, tax leniency and a traditional work ethic,” according to an article posted on the website of the Hungarian Embassy in Washington, D.C.
Even if Hungary accedes to the deal, it may not be able to be implemented domestically. Conservative Democrat Sen. Joe Manchin (W-Va.) yet again doused the Biden administration’s tax agenda last week when he said he couldn’t reach a deal on proposals with Democratic leadership.
“I said we’re not going to go down that path overseas right now because the rest of the countries won’t follow, and we’ll put all of our international companies in jeopardy, which harms the American economy,” Manchin said in a radio interview on Friday.