Rick Scott tells G-20 leaders he won’t support a global minimum corporate tax
Ahead of G-20 summit in Rome last week, in the United States Senator Rick Scott, R-Fla., Sent an open letter to G-20 leaders expressing opposition to a 15 percent country-by-country minimum tax rate on multinational corporations, insisting it poses a significant threat to American competitiveness.
In his letter, Scott reminded world leaders that any changes to the tax code or tax treaties must obtain the approval of the US Senate.
The letter is below.
Dear leader of the G-20:
On October 8, 2021, 136 countries of the Inclusive OECD / G20 framework joins the Declaration on Two-pillar solution to tackle the tax challenges of the digitization of the economy, a revised two-pillar agreement in which participating countries will radically change their rights to tax multinational enterprises (MNEs) and ensure that MNEs with turnover above US $ 870 million are subject to a effective minimum tax rate of 15% from 2023.
I want to be clear: this two-pillar solution poses a significant threat to current and future US competitiveness, and is not in the best interests of US taxpayers, job creators, or families. While there are issues related to global taxation that must be addressed and deserve global cooperation, it is also imperative that each country retains sovereignty over its own tax code and tax policies. Global competition drives innovation and enables the world’s various economies to participate in the international marketplace in ways that meet their individual needs and goals. The prospect of handing over tax decision making to an outside body is not something I can support.
While US Secretary of the Treasury Janet Yellen helped lead the negotiations on this deal and expressed the US government’s support for the two-pillar solution, it’s important to note that neither she nor President Joe Biden have the authority to unilaterally change the US tax code. The US Congress must pass a law to change US law. Additionally, in order to enter into or amend a bilateral or multilateral tax treaty, the Biden administration must receive approval for such a treaty with a two-thirds majority vote of approval in the United States Senate.
As a US Senator who represents the interests of families and businesses in Florida, my opposition to the Comprehensive Minimum Tax Agreement is deeply rooted in the dire consequences it will have here in America. According to Budget Penn Wharton model, both before and after Congress adopted the Tax Cuts and Jobs Act 2017, MNEs paid an effective US tax rate of about 2% on foreign income. He estimates that if the United States were to conform its minimum tax to the two-pillar solution, which includes a country-by-country minimum tax of 15%, the residual United States tax rate on the foreign income of multinationals would rise to 6.1%, which means more costs for families and consumers around the world. If American businesses become globally uncompetitive because of the two-pillar solution, the result will be fewer jobs, lower wages for workers, stifled investment, and suppressed innovation.
I oppose the OECD / G20 Inclusive Framework and will continue to oppose the two-pillar solution as currently drafted, and will not support its endorsement by Congress. In addition, I will strongly oppose any attempt to President Biden and Secretary Yellen to usurp or circumvent the role of Congress in shaping tax policy to move this deal forward.
Thank you for considering this important issue.