Rep. Jason Smith: We have the 'overwhelming votes' to pass debt ceiling bill
Rep. Jason Smith, R-Mo., explains why he will support President Biden and House Speaker Kevin McCarthy’s proposed debt limit deal ahead of the default deadline.
Every nation must be afforded the right to defend its territorial and economic sovereignty and the interests of its citizens. The global tax deal negotiated by the Biden administration at the Organization for Economic Co-operation and Development (OECD) would violate that right and cede American sovereignty to a faceless and unaccountable international bureaucracy.
For any administration to put other nations' best interests, including those of Communist China, ahead of what’s best for the American people is reckless and unconscionable.
That is why my Republican colleagues on the Ways and Means Committee and I have introduced the Defending American Jobs and Investment Act to correct the Biden administration’s mistakes and prevent foreign nations from infringing on our sovereignty. This legislation stands up to potential attack by foreign countries to protect American workers, businesses, and our economic competitiveness.
Under the Biden administration’s OECD tax deal, foreign countries are authorized to determine whether a U.S. company is paying enough tax. (CBS/Paramount Plus/The Daily Show/YouTube)
To put this absurd situation into perspective, the United States provides over 20% of the OECD’s budget each year, twice that of the next highest country. China on the other hand provides no funding to the organization. Despite that fact, President Biden’s negotiating has allowed other countries to steamroll the U.S. on global tax policies that will harm American jobs, growth, and tax revenues.
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More than five years ago, House Republicans delivered on a strong global minimum tax to protect our tax base, while modernizing our tax system and promoting long-term economic growth and jobs. This model remains the only global minimum tax in the world and it has proven effective: by collecting billions in tax revenue each year.
Rather than simply follow the success of the U.S. global minimum tax, these countries are also seeking to tilt the competitive playing field in their direction with a new surtax on American headquartered employers.
Under this disturbing aspect of the Biden administration’s OECD tax deal, foreign countries are authorized to determine whether a U.S. company is paying enough tax, and if they determine otherwise, levy a surtax on the company’s business activities in the United States. This would penalize important bipartisan tax policies like the U.S. R&D tax credit, while simultaneously ignoring massive state subsidies in China and other countries that are paid in cash.
In short, it creates a perverse race to the bottom to replace our current tax incentives that spur innovation and economic growth with direct government subsidies.
Under current rules, the OECD global deal would allow foreign countries to extract $120 billion in U.S. tax revenue over the next decade. Even if Congress decided to go along with the Biden-OECD deal, it would be signing away nearly $60 billion from the Treasury, enough to fund U.S. Immigration and Customs Enforcement for seven years.
President Biden has usurped Congress’ authority in formulating federal tax policy and crafted new tools for foreign countries to use against U.S. companies. (AP Photo/Damian Dovarganes)
If allowed to continue, the OECD global tax negotiations will result in major losses for America, the result of President Biden’s efforts to block congressional input and instead work exclusively with European bureaucrats. Knowing the American people and their representatives would never sign on to a bad deal, the Biden administration has hidden the true costs and ignored years of warnings by Republicans.
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President Biden has not only usurped Congress’ authority in formulating federal tax policy, but in doing so has crafted new tools for foreign countries to use against U.S. headquartered companies in the economic race their national champions could not win on a level playing field. According to recent economic research, the new OECD surtax would increase the effective tax rates of U.S. companies by nearly 20%, while their foreign competitors would be faced with less than one-third of the burden.
Republicans in Congress recognize the right of other nations to put forward tax rules applicable to companies and operations within their own sovereign borders. However, we emphatically reject the attempt by other nations to penalize American companies and activities by U.S. workers within our own borders.
As I warned the OECD in a letter in February, House Republicans will not tolerate such attacks and will utilize every tax and trade countermeasure at our disposal to ensure our sovereignty and tax code are not undermined.
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I introduced the Defending American Jobs and Investment Act, supported by every single Republican member of the Ways and Means Committee, to create a reciprocal mechanism that, if needed, will allow us to counter foreign nations that enact discriminatory tax laws that reach into the U.S. Treasury and business activities within the United States. If foreign nations and the OECD move forward with implementing an arbitrary and unfair surtax on U.S. companies, House Republicans will ensure we can do the same on foreign competitors.
Amazingly, right now, the Biden administration is on the side of our foreign competitors. It has made clear it would like to continue down the path of economic ruin while propping up foreign nations and even our adversaries. House Republicans do not intend to go along with this misguided approach.
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