Republicans on the US House Ways and Means Committee have proposed new legislation on 22 January 2025, which aims to tighten oversight of foreign tax policies. The bill shall require the Treasury Department to identify extraterritorial and discriminatory taxes implemented by other countries, including the Pillar Two UTPR.

If such taxes are identified, the US tax rates on income for wealthy investors and corporations in those countries would increase by 5 percentage points annually for four years, then remain 20 percentage points higher as long as these extraterritorial and discriminatory taxes persist.

This stems from a memorandum from the Trump Administration on America First Trade Policy. While focused on trade and tariffs, it also directs the Treasury Secretary, with input from the Commerce Secretary and US Trade Representative, to investigate whether foreign countries impose discriminatory or extraterritorial taxes on US citizens or corporations under Internal Revenue Code Section 891.

The Trump Administration will be fully equipped to deploy any economic countermeasures necessary to protect American workers and job creators from foreign nations that seek to impose extraterritorial or discriminatory taxes on American businesses, outlined in legislation introduced today by Ways and Means Committee Chairman Jason Smith (MO-08) and all 25 Committee Republicans. The Defending American Jobs and Investment Act (H.R. 591) comes on the heels of President Trump’s executive order to cancel US involvement in the global tax scheme, which the Biden Administration had been negotiating at the Organization for Economic Co-operation and Development (OECD) that gives foreign nations the authority to place discriminatory taxes on American companies.

Ways and Means Committee Chairman Smith (MO-08) issued the following statement:

“Congressional Republicans made it clear as soon as the Biden Administration initiated its negotiations with the OECD that the United States would never be party to a global tax surrender. Now with President Trump in the White House, we finally have a leader who will defend American workers and businesses against economic attacks by other nations. One of the Trump Administration’s first actions was to reject the OECD framework that would have destroyed US jobs, forfeited an estimated USD 120 billion in tax revenues, and enhanced China’s competitive advantage. The Defending American Jobs and Investment Act will ensure that President Trump has every tool at his disposal to pushback against any foreign country that seeks to undermine America’s economic vitality or unfairly target our workers and businesses.”