Feenstra Helps Introduce Legislation to Defend American Businesses, Workers, and Families from Foreign Tax Schemes
WASHINGTON, D.C. – Yesterday, U.S. Rep. Randy Feenstra (R-Hull) helped introduce – alongside U.S. Rep. Ron Estes (R-KS) and Chairman of the House Ways and Means Committee Jason Smith (R-MO) – the Unfair Tax Prevention Act to discourage foreign countries from attacking U.S. jobs and tax revenues through the Organization for Economic Co-operation and Development (OECD)’s Pillar 2 so-called Under Taxed Profit Rule (UTPR) surtax. Just this week, in a tacit acknowledgment that despite the Biden administration's negotiations, the U.S. is not on board with surrendering its sovereignty, its jobs, or its tax revenues, the OECD issued a delay in implementation of the UTPR. If a country moves forward with a UTPR surtax on American workers and businesses, the Unfair Tax Prevention Act imposes a reciprocal tax measure that will apply as long as the foreign country's unfair tax remains in place.
“President Biden and Secretary Yellen forced our country into a terrible deal – constructed by the OECD – that will raise taxes on American businesses, harm our workers, and allow foreign governments to use our companies as their own personal piggybanks. It’s absolutely ridiculous and an insult to American competitiveness, exceptionalism, and ingenuity,” said Rep. Feenstra. “I’m proud to help introduce legislation that imposes reciprocal taxes on foreign nations that saddle American businesses with unfair taxes of their own. Serving on the House Ways and Means Committee, I will continue to fight back against foreign tax schemes that disadvantage American industry, kneecap our economy, and leave our workers and families behind.”
"Congressional Republicans are not going to turn a blind eye to other countries – emboldened by the Biden administration's dangerous and misguided policies – targeting U.S. companies with higher taxes that will destroy U.S. jobs and steal U.S. revenues," said Ways and Means Committee Chairman Smith. "Nor will we allow foreign entities – including companies controlled by the Chinese Communist Party – to exploit those circumstances to gain an unfair competitive advantage against American workers and job creators. It is particularly shameful that the deal the Biden administration has cut at the OECD does nothing to hold China accountable or ensure it will not cheat under this new global tax scheme. This week's announcement by the OECD that it's delaying the deadline for implementation is a clear sign that other countries are realizing that while the Biden administration may be interested in colluding with them to raise taxes on American businesses, the Congress that actually writes tax law in our country is not on board. This legislation is the next and necessary step to defend American sovereignty and jobs from the Biden administration's global tax surrender."
Background on the Unfair Tax Prevention Act
The Unfair Tax Prevention Act defends Americans from unfair taxation by foreign countries with a reciprocal tax measure for any country that decides to target Americans under the guise of the OECD deal by:
- Defining “foreign-owned exterritorial tax regime entities” (FETR entities) as foreign-controlled entities connected with entities operating in jurisdictions with extraterritorial taxes aimed at U.S. business operations, including the UTPR surtax.
- Strengthening anti-avoidance rules in the U.S. base erosion and anti-abuse tax (BEAT), by eliminating the 3% base erosion percentage floor and the $500 million gross receipts test for FETR entities.
- Revoking the ability of FETR entities to disregard certain service payments and payments subject to withholding taxes and treats 50% of cost of goods sold as a base erosion tax benefit.
- Accelerating the scheduled BEAT rate increase and tax credit changes for FETR entities.
You can find legislative text HERE.
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