Several Democratic senators offered feedback to a proposal by U.S. Senate Finance Committee Chairman Ron Wyden (D-OR) and U.S. Sens. Sherrod Brown (D-OH) and Mark Warner (D-VA) to overhaul the U.S. system for international taxation.
The responding senators, Sens. Sheldon Whitehouse (D-RI), Dick Durbin (D-IL), Chris Van Hollen (D-MD), Elizabeth Warren (D-MA), and Jack Reed (D-RI) offered several recommendations to keep it aligned with President Joe Biden’s outline for international taxation.
Among their recommendations, they call for a rate on foreign profits, specifically Global Intangible Low-Taxed Income (GILTI), that is no lower than what President Biden proposed, but ideally equals the domestic tax rate, to reverse incentives for companies to shift profits and outsource jobs overseas. Further, they call for reforms to address flaws in the Trump tax law’s Base Erosion and Anti-Abuse Tax (BEAT) provision and repeal a tax break created by the Trump tax law known as Foreign Derived Intangible Income (FDII). The latter encourages large multinationals to locate assets like plants and equipment offshore.
In addition, the senators would like to see it include reforms to prevent “inversions,” where companies renounce their U.S. citizenship to avoid taxes. Also, they would like to see it restrict the interest deduction for multinational enterprises with excess domestic indebtedness, and require public disclosure of profits, taxes, employees, and tangible assets to the IRS.
“Fixing our international tax system will provide a major source of revenue to finance President Biden’s Build Back Better plan to create an economy that works for everyone,” the senators wrote. “But its importance goes beyond raising revenue. Strong international tax reform will make our tax code fairer for and improve the competitiveness of American workers and domestic businesses.”
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