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U.S. stands to lose up to $120 billion under global minimum tax plan, analysis finds

The JCT considered multiple scenarios based on when or if the U.S. or the rest of the world adopts the plan, resulting in estimate revenue losses ranging from $56.5 billion to $120 billion.

Published: June 20, 2023 9:36pm

The United States stands to lose more than $120 billion in tax revenue under a global minimum tax plan the Biden administration negotiated, according to the Joint Committee on Taxation.

The Organization for Economic Co-operation and Development’s (OECD) global minimum tax, aka Pillar 2, is an initiative by which countries domestically adopt a minimum 15% tax rate on Multinational Enterprises (MNEs). The plan specifically applies to such entities earning more than 750 million Euros ($818.685 million USD). The OECD contends that the plan will generate an additional $150 billion USD in global tax revenue per annum.

The U.S., however, may not be so fortunate, as analysis from the JCT suggests that a range of scenarios for the plan's adoption would result in substantial revenue losses for Washington. Senate Finance Committee Ranking Member Mike Crapo, R-Idaho, and House Ways and Means Committee Chairman Jason Smith, R-Missouri, commissioned the analysis.

The JCT considered multiple scenarios based on when or if the U.S. or rest of the world adopts the plan, resulting in a range of revenue effects. The Biden administration aims for the U.S. and most of the rest of the world to adopt the plan in 2025, a scenario the JCT concludes would result in a revenue loss of $56.5 billion. Should the rest of the world hold the course while the U.S. opts against Pillar 2, the country could lose as much as $120 billion.

The analysis also considered "unlikely" scenarios in which no country aside from the U.S. adopts the plan or no nation at all follows through. The committee estimated a revenue gain should the former scenario occur and no change in the event of the latter.

In light of the analysis, Crapo and Smith condemned the tax scheme as a surrender of U.S. sovereign tax authority and a likely financial disaster for the country.

"The Biden Administration unilaterally surrendered to the OECD tax cartel by agreeing to a global tax code that will extract more than $120 billion in US tax revenue over the next decade—unless Congress also surrenders its sovereignty over U.S. tax policy. This is a lose-lose deal negotiated by the Biden Administration," they wrote. "Not only does the OECD’s global tax code undermine U.S. sovereignty to enact its own tax policy and vault foreign countries ahead by encouraging a subsidy race to the bottom, but this 'America Last' policy shifts jobs and—as this analysis makes clear—tax revenues out of the United States."

Ben Whedon is an editor and reporter for Just the News. Follow him on Twitter.

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