Several senior Republicans in the U.S. Senate rejected the G7 deal at the global minimum corporate tax rate. The agreement allows more countries to tax large multinational corporations, but also raises questions about the ability of the United States to implement the agreement.
Republican Sen. John Barroso spoke of the disintegration of competition and an agreement that would be detrimental to the US economy. His colleague Senator Pat Doomi said the deal would divert tax revenue from the U.S. Treasury to other countries.
Republican opposition leader Joe Biden may be tempted to use budget procedures to push the initiative through Congress. For that he only needs the support of the Democrats. But lawyers and tax experts wonder if such an international agreement could be passed by the Senate without a two-thirds majority. The Senate between the Republicans and the Democrats is now 50 to 50, so the support of the Republicans is essential.
In the milestone agreement, the G7 finance ministers agreed to target a global minimum tax rate of at least 15 percent. In addition, the profits of large companies in the countries where they are manufactured may be subject to additional taxes. U.S. Treasury Secretary Janet Yellen has said she will end what she calls a “great, never-made commitment” race to global taxation.
The G7 countries have also agreed to end taxes on digital services, but the timeline for doing so depends on the implementation of the new rules. The agreement is a precursor to a broader agreement in the G20 and 140 countries participating in international negotiations on taxes to be paid by large companies such as Google parent Alphabet, Amazon, Apple and Facebook.
The US Constitution gives the president the right to enter into international agreements with the consent of two-thirds of existing senators. If this agreement can be compiled into a budget complex, an absolute majority will suffice. When the votes in the Senate are tied, the votes of Vice President Kamala Harris are decisive.
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