Democrats Push to Narrow Gaps in Cross-Border Corporate Tax Rates as Biden’s Agenda Advances

Tax attorney and former Obama administration Treasury Department official Joshua Odintz spoke with The Wall Street Journal about the impact President Biden's proposed changes to international corporate taxation will have on U.S. businesses. Democrats are close to passing significant changes to international corporate taxation, moving toward a system that would reduce the gaps between nations’ tax rates and—if it all works as planned—making taxes a less important consideration for where companies put investments, profits and headquarters.

The international tax changes are included in the social-spending and climate-change bill passed by the House last week. They mark the U.S. contribution to the global tax talks that Treasury Secretary Janet Yellen accelerated this year and that culminated in October’s agreement for a 15% global minimum tax.

The Democratic plan, which builds on the 2017 GOP tax law, would help push tax rates into a narrower band, reducing companies’ opportunities to exploit gaps across borders. The higher taxes on U.S.-based companies would take effect in 2023, and the impact on companies would depend on whether and when other countries follow through on their promises to impose similar taxes.

“Businesses will be very concerned if foreign countries, especially the European Union, have not made progress in the first half of next year,” Mr. Odintz commented.

READ: Democrats Push to Narrow Gaps in Cross-Border Corporate Tax Rates as Biden's Agenda Advances