Senior staff on the House and Senate tax-writing committees said lawmakers are monitoring the federal revenue impact of the Organization for Economic Cooperation and Development’s global tax rewrite.
The OECD is trying to get nearly 140 countries to agree on an overhaul of how the digital economy is taxed. The organization estimates its plan could bring in about $100 billion annually. But policy makers worry that the outcome of the new international tax framework could shrink U.S. tax revenue. That’s on top of U.S. multinational company concerns caused by a proliferation of unilateral digital taxes.
“From our perspective the effect on the U.S. tax base will be a very determinative factor,” as to whether Congress supports an international agreement, said Beth Bell, tax counsel for the House Ways and Means Committee Chairman Richard Neal (D-Mass.), at a Tax Council Policy Institute conference Friday. Bell’s counterparts for the panel’s Republicans, as well as Senate Finance Committee majority and minority staff, agreed with her assessment.
Still, it’s too early to tell for sure because the OECD hasn’t arrived at a final blueprint for an agreement, Bell said. The Treasury Department agrees with Congress on concerns over U.S. tax revenue, she said.
Mark Warren, chief tax counsel for Senate Finance Chairman Chuck Grassley (R-Iowa), also said that legal certainty for U.S. companies operating internationally would factor into considerations if Congress ultimately must approve legislative and tax treaty changes.
“They really are two sides of the same coin. Where is the revenue coming from?” Warren said.
All members of the panel expected details of an OECD deal to take more time than the current end-of-year timetable allows.
“It’s not going to be wrapped up in a bow as of November,” said Tiffany Smith, chief tax counsel for Senate Finance ranking member Ron Wyden (D-Ore.).