Global Tax Deal Would Undercut U.S. Tax Breaks, Businesses Warn
Tax attorney and former Obama administration Treasury Department official Joshua Odintz spoke with The Wall Street Journal about the emerging global minimum-tax agreement and how businesses are warning that it would make domestic tax breaks less valuable for some U.S.-based companies, potentially limiting the effectiveness of incentives for research, exports and low-income housing.
Their concerns stem from proposed international rules about how nations can use tax breaks to aid companies’ home-country operations, under the global deal that puts a 15% floor under corporate tax rates. To create a level playing field, the rules let other countries impose taxes if multinational companies pay too little at home. U.S. policy makers are still assessing any impact, but companies are starting to raise alarms.
The rules pose a potential problem for some U.S. companies, including those investing in municipal bonds. In particular, the U.S. frequently uses nonrefundable tax credits as opposed to government grants or refundable tax credits that get more favorable treatment.
“Legislative bodies may get upset when they understand that their hands may be tied,” Mr. Odintz commented.