Among the dozens of job-destroying tax increases in President Biden’s so-called “Build Back Better” plan are huge increases in the taxes paid by American companies when they sell their products overseas. The Biden proposal would double the tax rate that U.S. companies currently pay on income made in other countries but have zero tax impact on foreign companies.
Increasing taxes on American companies when they compete overseas will unnecessarily punish domestic job creators and help our competitors. At a time when the country desperately needs to sell our products around the world, putting Chinese companies ahead of American firms should be unthinkable.
Treating Chinese Businesses Better Than American Job Creators
President Biden and Democrats have proposed dueling plans to hike taxes on the money that U.S. companies pay when they sell goods overseas. Under current law, American businesses already pay U.S. taxes when they sell products in other countries and pay the applicable taxes in those foreign nations. These new tax hikes would raise the amount of taxes our companies pay when they sell American-made products in other countries but have zero impact on competitors like China.
House Proposal Would Increase Taxes Above Biden’s Own Global Minimum
The House tax increase bill would raise top global taxes on American companies from 13.1% to 17.4%. That would amount to a 32% tax hike overnight on American companies competing overseas. The new rate would be higher than the 15% global minimum rate that the Biden Administration has already endorsed and put American products at a huge disadvantage overseas.
Biden Proposal Would Double Taxes On U.S. Employers Selling Goods In Other Countries
President Biden’s preferred treatment of foreign income would double the GILTI rate from 10.5 percent to 21 percent and include a host of other changes intended to broaden the base, including the repeal of a 10 percent deduction for foreign tangible assets, calculating GILTI on a country-by-country basis, and repealing an exclusion for income already facing high foreign tax rates. Taken together, Biden’s proposal is even more onerous than what the House has proposed and would extract nearly $1.3 trillion from American companies.
Tilting the Playing Field Toward Foreign Companies
For U.S. companies doing business overseas, the House plan would more than triple the residual effective tax rate on any money earned outside the country while imposing no burden at all on their foreign counterparts, giving the rest of the world a substantial competitive advantage. According to the University of Pennsylvania’s Penn Wharton Business Model, adopting the House proposal in the current international tax system means that U.S. companies would face meaningfully higher taxes while “foreign multinationals could continue to exploit tax havens to increase their profitability.”
Coalition to Protect American Workers