President Donald Trump should secure U.S. interests in the international tax space by pushing for a more favorable approach than that taken by the Joe Biden Administration, or by leaving global tax deal negotiations altogether, according to a new National Taxpayers Union Foundation (NTUF) report released Friday.
The United States has been involved in global tax negotiations with the Organization for Economic Cooperation and Development (OECD), which is developing a “Two Pillar Solution” for international tax issues. Both Pillars would result in significant revenue loss for U.S. companies.
“President Trump has the opportunity to score a big win by preventing out-of-control OECD negotiations from harming U.S. businesses,” NTUF Policy Manager and report author Debbie Jennings said.
In his first term, President Trump worked to protect American international tax interests. He signed the 2017 Tax Cuts and Jobs Act (TCJA), which created new international tax provisions to protect the U.S. tax base and increase international tax competition. Among those provisions was the world’s first global minimum tax, known as the Global Intangible Low-Taxed Income (GILTI) tax.
Under President Biden, the U.S. Department of the Treasury made more concessions to other countries in OECD negotiations and proposed changes to GILTI that would raise its rate to 21%, well above the OECD’s minimum tax rate of 15%.
On day one of his second term, President Trump signed an executive order addressing the ongoing OECD global tax deal negotiations and the failure of the prior administration to advocate for American interests. The executive order instructs the new administration to explore options to respond to countries that have implemented discriminatory taxes.
It is clear that the deal that has been negotiated at the OECD is unacceptable for the Trump Administration. However, if the United States decides to leave the table entirely, it would have to negotiate with countries unilaterally to address these concerns. The U.S. could instead stay at the negotiating table and demand changes to the current agreement that better reflect the U.S. interests that Trump’s first administration tried to preserve.
“Continuing negotiations could be beneficial to some U.S. policy goals such as eliminating DSTs, but it would be unacceptable to remain at the negotiating table if the issues are not properly addressed,” the report concludes.