Samford: ‘I hope the Senate will embrace President Trump’s vision of welcoming more investment to America and reject the Sec. 899 provision’
WASHINGTON – Jonathan Samford, president & CEO of the Global Business Alliance (GBA), released the following statement in response to the House passage of the reconciliation package:
“House Republicans deserve much credit for their continued leadership in setting international tax policy. After all, they led the world in 2017, and they have improved on many of those provisions in this latest iteration. Unfortunately, in their zeal to confront the OECD’s Global Minimum Tax, they have targeted major U.S. employers and the 8.4 million Americans who work for them with a tax hike that even the JCT acknowledges will drive investment from the U.S. economy. Not only do these discriminatory tax provisions directly contradict President Trump’s vision of economic growth, they will erode what has been achieved since the Tax Cuts and Jobs Act was enacted. The impact of this punitive and discriminatory provision will be felt by workers in communities like Paris, Kentucky, and London, Ohio, not Paris, France, or London, England. I hope the Senate will embrace President Trump’s vision of welcoming more investment to America and reject the Sec. 899 provision when it takes up the One, Big, Beautiful Bill.”
The Ways and Means tax title includes retaliatory tax provisions – referred to by its code section, Sec. 899 – that would fundamentally reshape how U.S. subsidiaries are taxed in response to foreign digital and extraterritorial tax regimes.
International Companies Drive U.S. Economic Growth, Innovation and Job Creation
- Sec. 899 Threatens Great Paying Jobs: Nationally, 8.4 million U.S. workers are employed by international companies. Across the nation, these workers earn seven percent higher compensation than the economy-wide average – making $89,296 annually.
- Sec. 899 Threatens American Manufacturing: International companies support 2.9 million manufacturing jobs, accounting for 22 percent of total U.S. manufacturing employment.
- Sec. 899 Threatens U.S. Innovation: International companies reinvest over $80 billion annually in U.S.-based research and development.
Sec. 899 Punishes Companies for Investing and Creating Jobs in America
Sec. 899 Directly Contradicts President Trump’s Investment Agenda
- President Trump Wants More, Not Less Investment: President Trump’s “America First Investment Policy” prioritizes economic growth through investment and productivity. That includes encouraging investment from international companies to strengthen U.S. leadership in critical sectors. It states:
“Welcoming foreign investment and strengthening the United States’ world-leading capital markets will be a key part of America’s Golden Age …. My Administration will make the United States the world’s greatest destination for investment dollars.”
- Trump’s Record Investment Track Record: Barely into his second term, President Trump has already secured a record amount of private-sector investment, with much of it coming from international companies. Such investments would not be made in an environment where companies face an effective tax rate greater than 50 percent.
Sec. 899 Will Gut the Gains Made from TCJA
- Congressional Republicans have a proud record of crafting forward-looking, pro-growth international tax policy.
- Surge of Investment: The Tax Cuts and Jobs Act of 2017 (TCJA), which GBA strongly supported, made the U.S. a magnet for job-creating investment. Since its passage, inbound investment has surged by 35 percent.
- America Went First: TCJA introduced the world’s first global minimum tax (GILTI), years before the OECD’s Pillar Two, and reinforced America’s leadership on fair tax competition.
JCT Admits Sec. 899 Is a Revenue Loser Over the Long Term
- A Tax Hike that Loses Revenue: The Joint Committee on Taxation (JCT) expects that this provision will lose nearly $13 billion in tax revenue in 2033 and 2034, as targeted employers are forced to scale back their U.S. operations.
- Sec. 899 Hurts American Workers, not OECD Bureaucrats: JCT’s analysis is a sobering admission that international companies will not be able to operate in such a high tax environment. The impact will be felt by workers in communities like Paris, Kentucky, and London, Ohio, not Paris, France, or London, England.
- As a result, U.S. workers, not foreign governments, would bear the brunt of the economic fallout.
- Rather than targeting bad actors abroad, this proposal risks undercutting American jobs, investment and innovation.
Sec. 899 Invites a Global Tax War
- Sec. 899 Jeopardizes America’s Tax Treaties: The United States has long held a reputation for a stable tax environment built on international agreements. Sec. 899 will deeply erode the credibility of our long-standing tax treaties.
- Sec. 899 Will Create More Harm for U.S. Firms: Retaliatory or discriminatory tax provisions invite global escalation. U.S. trading partners are likely to respond with reciprocal measures, deepening tax disputes and increasing uncertainty for globally integrated businesses, including U.S.-headquartered firms.