Global Minimum Tax Faces Challenges in Congress
After years of negotiations, the Organization for Economic Co-operation and Development (OECD) announced in August that officials from more than 130 countries around the world have agreed to a global minimum tax plan—but a dispute over whether components of it need to be ratified as a treaty could inhibit America’s full involvement in the deal.
The agreement aims to end a decades-long “race to the bottom” among global tax rates for multinational companies. It has two pillars that, if enacted, will change how nearly every country on earth taxes multinational corporations. Pillar One establishes that earnings would be taxed in all of the countries a corporation operates in, not just where it has a physical presence. This change is a reaction to the growing number of Big Tech companies that do most of their business via the internet. Pillar Two would require the countries involved to implement a 15 percent minimum global tax rate for companies with revenues of more than $870 million.
For a further breakdown of the details, you can read what The Dispatch wrote about it back in June.
Now that countries have struck an agreement that would alter the world economy, leaders are considering how to implement the changes. There are many unanswered questions in the United States—chief among them is whether Congress will go along with the plan, and what the proper legislative mechanisms are for implementing it.