December 17, 2021
Dear Member of Congress:
We write today as members of the PACE Coalition, a broad-based organization dedicated to promoting U.S. job growth and a strong U.S. economy through policies that support the global competitiveness of American workers and American businesses. As the Senate begins to consider H.R. 5376, the Build Back Better Act, PACE strongly urges you to reject international tax proposals that would severely harm U.S. competitiveness.
The House-passed version of H.R. 5376 would further tilt the playing field against American businesses by imposing significantly higher taxes under the Global Intangible Low-Taxed Income (GILTI) provision. The United States is already the only country in the world that imposes a minimum tax on the active income that its companies earn abroad. Increasing the GILTI tax burden – before any other country has taken even preliminary steps to adopt their own foreign minimum tax – would significantly diminish the ability of American companies to compete in global markets and decrease the demand for goods and services produced by American companies and their American workers.
Congress should prevent a loss in American jobs caused by the unilateral adoption of higher taxes only on American companies. While many countries have endorsed the OECD statement on voluntary implementation of foreign minimum taxes, no other country in the world has yet adopted a foreign minimum tax. Further, an endorsement of the OECD statement does not require any country to adopt a foreign minimum tax of their own.
OECD final guidelines on a foreign minimum tax have been repeatedly delayed and there are no signs that other countries, including China, are planning to enact a foreign minimum tax in the next several years. Further, even if every country moved to adoption immediately, the House-passed bill would still impose a more restrictive foreign minimum tax on American companies than the foreign minimum tax outlined by the OECD.
Unless and until other countries implement their own foreign minimum taxes, there should be no increases in GILTI taxes on the foreign earnings of American companies. Likewise, the present-law tax rate on foreign-derived intangible income (FDII) should also be maintained to be in parity with the GILTI tax rate and continue its important role in incentivizing U.S. development and ownership of intellectual property.
Alliance for Competitive Taxation (ACT)
American Beverage Association
American Chemistry Council
American Petroleum Institute
Council of Insurance Agents and Brokers
Energy Workforce & Technology Council
Glass Packaging Institute
Illinois Manufacturers’ Association
Indiana Manufacturers Association
National Association of Manufacturers
National Foreign Trade Council
State Business Executives
U.S. Chamber of Commerce
United States Council for International Business