Wyden, Brown Introduce Bill to Block Latest Trump Administration Corporate Giveaway
Washington, D.C. – Senate Finance Committee Ranking Member Ron Wyden, D-Ore., and Senator Sherrod Brown, D-Ohio, today introduced legislation to block the Treasury Department’s latest corporate giveaway—an exception to the new tax on foreign earnings that allows multinationals to essentially choose the lowest available tax rate.
The Congressional Budget Office recently estimated that the 2017 tax law’s international provisions are an even bigger tax cut than previously estimated, with $110 billion in additional revenue lost due to giveaways from Treasury Department regulations and corporate tax planning.
“When the big multinational corporations said ‘jump,’ the Treasury Department asked ‘how high?’ Treasury has overstepped its authority to unilaterally give companies billions in tax breaks on top of the hundreds of billions in tax breaks they’ve already received. Our bill would block the proposed giveaway that essentially allows corporations to choose the lowest available tax rate. Working families don’t get this perk and big corporations shouldn’t either,” Wyden said.
“While the President has been busy threatening cuts to Medicare and Social Security, his administration has been quietly shelling out billions of dollars more in tax breaks to multinational corporations. President Trump and his Republican allies in Congress have made our tax code far too lucrative for corporations as it is. They don’t need yet another tax giveaway,” Brown said.
The 2017 Republican tax law created a new tax regime for multinational corporations – “Global Intangible Low-Taxed Income,” or “GILTI.” GILTI provides a special low tax rate for U.S. multinationals, allowing them to pay a 10.5 percent tax on their foreign earnings, half the 21 percent corporate rate.
Multinationals can further lower this reduced tax rate by claiming credits for taxes paid to foreign countries, though long-standing rules limit the amount of these “foreign tax credits” a company may take.
Multinational corporations, unhappy with the combination of limits on foreign tax credits and the new GILTI regime, aggressively lobbied Treasury for a way out of paying what they owe.
The Treasury Department then went well beyond its legal authority to create the multinationals’ desired tax break. The regulations propose an elective exemption from paying any GILTI taxes on certain income, if companies pay at least an 18.9 percent effective tax rate on that income.
This GILTI High-Tax Exclusion allows companies to choose how they want to be taxed under the GILTI regime. Corporations naturally will only use the exception when it cuts taxes on their offshore income.
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