As prepared for delivery.

 

“Welcome everyone, to this Tax Subcommittee Hearing, and thank you, Mr. Plowgian for joining us. We are here to discuss a matter critical to our nation’s economic success.

 

“Perhaps it began innocently enough.  The US had just enacted a historic reform of our tax laws, including the world’s first global minimum tax which only applied to US companies.

 

“At the same time, a few European countries were beginning to target some of our largest and fastest growing companies with discriminatory taxes known as ‘Digital Services Taxes’ or DSTs.

 

“The original idea of engaging in negotiations at the OECD was this: other countries could join the US with their own global minimum taxes and we could stop the proliferation of DSTs.

 

“Unfortunately, that’s not what happened at all.

 

“With active encouragement fromthe Biden Treasury Department, the OECD in its Pillar 2 agreement failed to recognize our pioneering global minimum tax as a qualifying tax.

 

“Instead, the agreement they came back with is so inconsistent with our tax laws that it would tilt the playing field in favor of foreign firms.

 

“It also seriously destabilizes the network of Constitutionally ratified bilateral tax treaties negotiated over the past 50 years.

 

“For the first time, through the Undertaxed Profits Rule or UTPR, the Pillar 2 agreement authorizes foreign governments to tax income generated outside its borders, including US source income.

 

“This is all based on an arbitrary set of rules approved by the OECD, foreign governments, and international accounting bureaucrats where the US has minimal representation.

 

“Congress has no say.

 

“It also favors the tax incentives Europe likes—refundable credits—over the non-refundable business credits more common in the US.  In this sense, it would constrain the ability of the US Congress to write tax laws that promote growth and jobs as Congress has done since the beginning of our Republic.

 

“This agreement is totally unacceptable, and it’s no wonder the Biden Administration sought to avoid consulting with Congress because they knew that Congress would never approve.

 

“OECD Pillar 1—intended to stop DSTs—is no better.

 

“Under the Pillar 1, US companies would pay far more than any other country and more than all of Europe. That’s right.  The US pays more than Europe.  That is according to a new analysis by a European Union think tank.

 

“Sixty percent of the revenue divided up under the Pillar 1 agreement would come from US firms. Sixty percent!

 

“Our own Treasury Department acknowledges that about 50% of the firms subject to the Pillar 1 agreement would be US companies.

 

“Republicans have repeatedly requested detailed analysis of how the agreement would impact American companies and workers, but Treasury has rejected those requests.

 

“All the while, foreign governments continue to collect DSTs from American companies.

 

“Given economic stagnation in Europe since 2008, these DSTs should come as no surprise. The U.S. will continue to be a revenue target.

 

“Going into these OECD negotiations, Treasury should have recognized that governments in Europe would be looking for ways to rein in successful American companies and extract additional tax revenue, to prop up their own poor domestic finances.

 

“As one author in Tax Notes put it, this effort ‘has to be understood as a primarily European project, and in the larger picture, a way to sustain the Euro.’

 

“This Administration has called for additional business taxes to fund their domestic spending agenda. So then why would Treasury negotiate an OECD deal that surrenders over $120 billion in US tax revenues to foreign countries? It makes no sense.

 

“This OECD global tax project is effectively controlled by Europe. Why? Because Europe controls one-third of the seats on the Steering Committee and the broader Inclusive Framework includes over 30 tiny former European colonies.  Members of this group include the Cook Islands, The Bahamas, Saint Lucia, and Samoa.

 

“The bottom-line is the deck is stacked against America at the OECD.

 

“That is why, it never made sense for Treasury to negotiate behind closed doors with a group of 140 nations on a ‘one-country-one vote’ basis when the US accounts for 25% of global GDP and almost pays almost that percentage of dues at the OECD.

 

“I will close with this: As a car dealer, who’s spent a lifetime at the negotiating table, it doesn’t take a rocket scientist to understand that the US has signed up for a bad deal.

 

“It’s a bad deal for the American taxpayers, American workers, and American businesses just trying to keep their doors open for the next generation U.S. workers.”