NAM is fighting congressional efforts to raise the minimum tax on foreign profits for U.S. companies above the rate recently reached by a global minimum tax deal, severely disadvantaging committed manufacturers at scale global.
The context: For a number of years, the Organization for Economic Co-operation and Development has led global tax negotiations that would fundamentally reshape the current international tax system. A centerpiece of the effort is a 15% global minimum tax that more than 130 countries approved earlier this month. The agreement is expected to be implemented in 2023.
The American angle: The United States already has a global minimum tax, called the Low Tax Global Intangible Income Tax, or GILTI, which functions as a minimum tax on the foreign income of US multinational corporations. Now Congress is considering increasing it as part of reconciliation legislation. In particular, the pending House reconciliation bill would increase GILTI’s rate from the current tax rate from 13.125% to 17.4%, above the proposed global minimum tax rate.
The problem: NAM has made it clear that the United States should not make changes to GILTI until other countries implement a minimum tax, and that the United States should not have a minimum tax regime that results in a higher tax burden than the rest of the world. Such a burden on globally engaged companies would make it more difficult for these companies, including manufacturers, to compete and succeed in the global market.
What we say: “If Congress were to enact a tougher tax regime than the rest of the world, it would tip the scales against manufacturers and manufacturing workers in the United States,” said Chris Netram, vice president of fiscal and economic policy interior of NAM. âA tougher regime would hurt manufacturers, reducing their ability to compete around the world and invest in well-paying jobs here at home. “
Learn more: A NAM to study showed that proposed damaging changes to the GILTI regime could cost up to 1 million jobs in the United States.