Brady Says Negotiation on International Taxes Not Appropriate Way to Stop DSTs

After the House Ways and Means Committee chairman expressed optimism that global tax negotiations would solve the problem of digital services taxes around the world, Rep. Kevin Brady of Texas, the ranking Republican on the committee, said that President Joe Biden's strategy is a lose-lose for America.

He said that the whole reason the Biden administration is pushing for a global minimum corporate tax is because government officials know hiking the current corporate tax rate to 28% will drive businesses to incorporate overseas and send research and development and manufacturing abroad. "They’re desperate for a global minimum tax to somehow mitigate the sabotaging of the U.S. economy and our competitiveness around the world," he said. "Seems to me that America’s global competitors see a win-win situation here: either America’s global corporate tax rate skyrockets … driving more investment overseas into Europe," or those countries impose DSTs, which he said is a grab of our tax base, "making it harder for the U.S. to fund our critical needs in the 21st century."

When asked by International Trade Today about how the DSTs could be avoided if not through global negotiation, he said that's the White House's problem to solve. "I’m pleased that [the Office of the U.S. Trade Representative] announced 25% tariffs on six countries over their digital services taxes" this week, he said. He said he hates tariffs, but it's important for America not to be held hostage through DSTs.

Brady continued to say that the Senate including the renewal of the Generalized System of Preferences benefits program and the Miscellaneous Tariff Bill in its China package is helpful (see 2105190043). "I think the proposals introduced in the Senate represent a lot of common ground we can embrace," he said.

He said he doesn't know if the House would pass legislation to require the Section 301 exclusion process to be opened again for Chinese imports; the Senate amendment that renews GSP and MTB also includes that provision.

He said his sense from talking to Ways and Means Chairman Richard Neal, D-Mass., is that Neal plans to move a GSP and MTB renewal as stand-alone bills. "As you know, delay is costing American businesses small and large," he said during a telephone press conference June 4.