Feenstra Demands Answers from Treasury Secretary Janet Yellen Over Biden Administration’s Failure to Support American Businesses and Main Streets

WASHINGTON, D.C. – Today, during a House Ways and Means Committee hearing, U.S. Rep. Randy Feenstra (R-Hull) demanded answers from U.S. Treasury Secretary Janet Yellen over the Biden Administration’s failure to negotiate competitive tax agreements and protect pro-growth tax credits that benefit American businesses, workers, and main streets.

Specifically, Feenstra noted that Pillar Two – an international pact that requires multinational companies to pay a 15% minimum tax on earnings – was not negotiated with the best interests of American businesses. Under the Biden Administration’s agreement, non-refundable tax credits – which are very common in U.S. tax law – receive worse treatment than the credits of other countries. Countries like the United Kingdom and China protected the integrity of their tax credits in global negotiations and thus maintained lower tax rates while the Biden Administration failed to protect American businesses and workers from higher taxes.

Feenstra’s opening remarks, as prepared, are as follows:

Secretary Yellen,

Both Congress and U.S. Companies have been sounding the alarm on Pillar Two since the Model Rules were released in December of 2021. Treasury has received letters from both the Ways and Means Committee and the Senate Finance Committee, in addition to letters from the companies that will be affected, outlining their concerns with both how this agreement has been negotiated and what exactly was agreed to by this Administration. Though there are multiple points of concern, let’s focus on one of the most common.

Under the agreement, non-refundable tax credits can bring a company’s U.S. Pillar Two effective tax rate below the 15% minimum, while refundable credits are not taken into account. As you know, our tax laws are full of non-refundable business tax credits enacted by this Committee over decades: most notably the R&D credit.

Other countries, like the United Kingdom, were able to protect their credits in the negotiations. I am trying to understand why the Treasury Department would agree to curb or eliminate incentives created by Congress to encourage investment that we see as beneficial to our economy. This seems to me to be a pretty clear example of us getting a bad deal, and I hope that the Department of the Treasury is taking steps to address these concerns.

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