If the Republican Party in the United States takes back control of Congress in elections next November it will not agree to increases in corporate taxation, a former top figure in the Donald Trump administration has forecast.
Mick Mulvaney said it was up to Congress and not the president to determine taxation and spending issues in the US.
Introducing a minimum tax rate of 15 per cent for multinational corporations is a central part of a global agreement reached last year, but how to put this in place in US legislation remains controversial. In Europe, Poland has also blocked agreement on a 15 per cent minimum rate for the EU, although it may eventually sign up.
Plans by the Biden administration to introduce a 28 per cent corporate tax rate and a 21 per cent minimum rate on the overseas earnings of its companies – the-so-called Gilti rate – last year did not go ahead as they formed part of a major overall $1 trillion spending bill that had insufficient support to get approved by the US Congress.
The White House has now sought to reintroduce the higher corporation tax measures as part of the administration’s new $5.8 trillion budget proposals for 2023.
Mr Mulvaney, the former director of the US Office of Management and Budget under president Donald Trump, warned this week that if the proposed global corporate tax rate was not adopted quickly in the US it was likely to run into serious problems if Republicans won the mid-term elections in November.
Mr Mulvaney told The Irish Times there was no chance of Republicans agreeing to raise corporate tax rates if they regained control of Congress following the elections. Sources believe that both the corporation tax rate and the Gilti rate would likely be cut in negotiations with Congress, but even then it remains unclear whether agreement can be reached.
Polls currently suggest that Republicans will secure a majority in Congress in the mid-term elections.
Budget proposals
Mr Mulvaney, who is also a former US envoy to Northern Ireland and acting White House chief-of-staff, said under the American political system the president puts forward budget proposals but it is Congress that determines spending and taxation issues.
The Biden administration in its new budget documentation said: “For decades, American workers and taxpayers have paid the price for a tax system that has rewarded multinational corporations for shipping jobs and profits overseas.
“Last year the administration rallied more than 130 countries to agree to a global minimum tax that will ensure that profitable corporations pay their fair share and incentivises US multinationals to create jobs and invest in the United States. The budget contains additional measures to ensure that multinationals operating in the United States cannot use tax havens to undercut the global minimum.”
