Congress Unlikely to Ratify Global Tax Deal, Senator Says
(Bloomberg) -- A key U.S. lawmaker said Congress probably won’t ratify a global tax accord that world leaders aim to finalize by the end of October, potentially imperiling a deal aimed at reducing competition among governments with ever-lower corporate rates.
One half of the tax agreement is designed to help countries share the spoils from multinational firms like Facebook Inc. and Alphabet Inc.’s Google, and that part would require a treaty ratified by a two-thirds vote in the Senate, Republican Senator Patrick Toomey of Pennsylvania said Tuesday during a Senate Banking Committee hearing on Covid-19 relief.
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“I think that’s unlikely to happen,” Toomey said of achieving such a supermajority. Democrats and Republicans are currently evenly split in the 100-member chamber.
Treasury Secretary Janet Yellen, the main U.S. official working toward the global accord, said under questioning from Toomey that a treaty would be one of “a number of ways” for Congress to implement the deal. Toomey made clear that he sees it as the only way.
“I want to stress, we have for many decades bilateral tax treaties,” Toomey said. “Changing those treaties requires ratification in the Senate -- there’s no way around that that I can see.”
President Joe Biden has proposed higher taxes on corporations and high earners to pay for trillions of dollars in infrastructure and social spending, with legislation currently moving through Congress. The changes to global levies are a key portion of the tax proposals.
Group of 20 officials are aiming to finalize the agreement at a summit in late October. The Organization for Economic Cooperation and Development, which is overseeing the global talks among about 140 nations, says implementation would be possible as soon as 2023.
The other half of the tax agreement would establish a global minimum tax of at least 15% on corporate profits, and Democrats are looking to implement that portion with measures that require only a simple majority.
Despite Toomey’s assertion, Democrats may also still look for ways to implement the first part of the tax deal with a simple majority as well.
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