Key Republican leaders in the US House of Representatives, including Speaker Mike Johnson and House Majority Leader Steve Scalise, House Majority Whip Tom Emmer, House Ways and Means Committee Chairman Jason Smith, and and all other Republican members of the Ways and Means Committee sent a letter to the OECD Secretary-General on Tuesday, 17 September  2024, opposing the Pillar Two global tax deal.

“Implementation of the UTPR and other OECD policies would force the United States to forfeit USD 120 billion in revenue to foreign governments while offering competitive advantages to China and others,” writes House Republican Leadership and Ways and Means Republicans.

“Ultimately, the Biden-Harris administration lacks the authority to impose any tax deal on Americans without the approval of the US Congress – doing so would violate the United States Constitution…The United States Constitution expressly grants the taxing power to Congress, not to the President. Specifically, the US Constitution requires that ‘[a]ll bills for raising revenue shall originate in the House of Representatives.’ This constitutional structure makes the Committee on Ways and Means, the tax-writing committee in the US House of Representatives, the only entity where changes in US tax law may originate. Thus, the Biden-Harris administration’s unilateral negotiations without consultation with Congress constitutes a major overstep of its authority, with dire consequences for American workers and businesses.”

In addition to circumventing Congressional authority, the policy puts American workers and businesses at a competitive disadvantage against countries like China who have already indicated a willingness to game the system.

“China will exploit the OECD global tax deal’s loophole for direct government subsidies, which are a hallmark of Chinese economic activity. Other countries will likely do the same, thwarting the OECD’s stated purpose of ensuring a minimum level of taxation. Ultimately, the UTPR will target US workers and businesses by allowing foreign governments to claw back important US tax incentives (e.g., tax credits for research and development and low-income housing) and attack the operations of American companies in third-party jurisdictions…And even if a country like China were to move forward, there is no assurance that the CCP would play by the rules. For instance, last year it was reported that the Chinese government instructed state-owned companies to phase out their use of the big four accounting firms to address security concerns and Western influence. They were instead instructed to use auditors local to China and Hong Kong, subject to the control of the CCP.”

The letter expresses support for a lawsuit filed by the American Free Enterprise Chamber of Commerce that challenges the UTPR and makes clear that should the OECD – in collusion with the Biden-Harris Administration and other countries – proceed with this aspect of the global minimum tax deal, Congress will be forced to pursue countermeasures to protect US sovereignty and the fair treatment of American workers and businesses.

This latest action comes one year after Republicans on the Ways and Means Committee traveled to Paris, France, to meet with OECD officials and express American opposition to the Biden-Harris Administration’s unilaterally negotiated global tax surrender.