Rep. Darin LaHood | Facebook
Rep. Darin LaHood | Facebook
Rep. Darin LaHood recently took to Twitter his concerns about the Biden Administration's to double the GILTI tax that affects companies that operate overseas.
GILTI represents the income made by foreign affiliates of US companies from the source of intangible assets like patents, trademarks, and copyrights. The proposal would increase the corporate tax to 21%. A spokesman of the Ways and Means Committee discussed how this tax hike would negatively affect the U..S.'s competitiveness on a global scale.
"We raise it to 21% and it means that a company operating in the U.S. is subject to a greater tax liability on its earnings than another location, whether it be in the Asian Pacific or back in Europe than a competitor company, so that's a tax disadvantage that we tried to rid the U.S. of ... so that's a real loss of competitiveness and I worry about that a lot," the spokesman said.
Congress worried in the past that completely exempting foreign income would create a problem of profit-sharing abroad, so they slapped on a 10.5 minimum tax income that was intended to hit companies that were paying less than 13.5% abroad. LaHood feels that another sudden increase would put the U.S. in a bad light.
"On GILTI in particular there's a special level of sensitivity in the business community but the GILTI provision didn't end up as they told it would," the spokesman said. "There was a national tax that was promised, the tax turned out to be higher than that and that caught a lot of companies by surprise and they were dismayed by the outcome. To turn around and raise it yet again is going to make them suspicious of all the tax policy that comes through the Congress and I think that's not the kind of precedent that the administration and the Ways Means Democrats would want to set."
President Biden has pushed the GILTI tax raise to encourage domestic manufacturing, but Republicans still strongly oppose the raise.
"Fixing GILTI is a better strategy than raising it and a stash to refix would be the best thing that we could do," the spokesman said.
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