Curtis Dubay Curtis Dubay
Chief Economist, U.S Chamber of Commerce


October 04, 2021


The Biden administration is so eager to raise taxes on businesses that it is trying raise our existing global minimum tax while simultaneously imposing another, redundant global minimum tax. Both policies are misguided. Raising taxes on U.S. multinational businesses will hurt American workers through fewer jobs and lower wages. And it makes no sense to make our existing minimum tax worse before potentially levying another minimum tax.

That there are two minimum taxes under debate in two different places is confusing. President Biden wants the international community, working through the Organization for Economic Cooperation and Development (OECD), to apply a global minimum tax on multinational businesses from all countries. This would raise taxes on U.S. businesses that operate overseas. The rate on that tax would be 15 percent with where things stand now in negotiations. Treasury Secretary Janet Yellen is leading those negotiations on behalf of the administration.

A global minimum tax is problematic for U.S. businesses because it would result in tax increases for them, which will force them to reduce investment. Less investment leads to fewer jobs and lower wages for American workers.

The negotiations on the global minimum tax are ongoing and could take a while longer. Congress would likely have to pass legislation to enact the tax if a deal is struck, as would the governments of other participating nations. This would take additional time.

While those international deliberations are ongoing, the Biden administration has also proposed to raise the existing global minimum tax U.S. businesses already pay, known as GILTI. GILTI stands for Global Intangible Low-Tax Income. The Biden administration included increases to GILTI in its FY2022 budget. The details of the increases are found in the Treasury Department’s Green Book.

Recently, the House Ways and Means Committee included many of those GILTI increases in its portion of the reconciliation bill currently moving through Congress. This includes raising the GILTI rate to over 16.5 percent from the current 13 percent rate, decreasing the amount of depreciable property businesses could deduct, and forcing businesses to report their income on a country-by-country basis. Higher GILTI taxes would reduce investment and have negative consequences for U.S. businesses. Further, the country-by-country reporting standard would be an incredibly onerous change that would radically increase compliance costs for businesses.

Other countries, including those we are negotiating global minimum tax with through the OECD, do not have minimum taxes like GILTI. Raising GILTI before other countries may implement a new global minimum tax makes no sense. Both policies will hurt the U.S. economy and neither should be pursued, but at the very least the Biden administration and Congress should let the global minimum tax effort play out before unilaterally raising GILTI.

This is a more sensical approach, which is why 11 Democratic Members of Congress have suggested it instead of the current path.

The Biden Administration and Congress could pursue this more logical strategy by scrapping the reconciliation bill and starting over with a new approach that does not significantly raise taxes on American businesses.

About the authors

Curtis Dubay

Curtis Dubay

Curtis Dubay is Chief Economist, Economic Policy Division at the U.S. Chamber of Commerce. He heads the Chamber’s research on the U.S. and global economies.

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