Congressional Republicans are claiming that US President Joe Biden’s promises over the global tax initiative amount to “global tax surrender”, creating higher taxes, fewer jobs for Americans and a windfall for foreign competitors.

They say the Biden Administration has made tax promises to the world without congressional approval.

Republicans on the Ways and Means Committee of the US House of Representatives have written to Treasury Secretary Janet Yellen, urging her to work with lawmakers to protect US competitiveness and American jobs.

In October the OECD announced an agreement on a global minimum tax framework.

All countries — except the United States — are to adopt a 15 per cent minimum tax on their companies’ foreign profits starting in 2023.

Republicans say that for American companies the Biden Administration would not stop there.

The Committee on Ways and Means Republicans said that the President would tax American companies at a 26.25 per cent minimum rate on their foreign profits, 10 percentage points more than the agreed-to OECD rate.

They argue that the Trump Administration’s Tax Cuts and Jobs Act (TCJA) already created a US global minimum tax.

The committee members added: “Since TCJA’s enactment, we have seen an abrupt halt in corporate inversions and a measurable return of investment to the United States. Instead of building on the demonstrated success of the 2017 tax reform, the administration is proposing to burden American firms with a new set of international obligations.

“Our international treaty network has worked well over the last century to promote bilateral trade, investment and prosperity.

“We understand the importance of progress on new global tax agreements, but we believe that Congress must approve any commitments that might erode the US revenue base or significantly impact bilateral trade and investment flows.

“It is extremely troubling that the administration has made promises to the world without sufficient bipartisan, bicameral consultation.”

The Republicans gave context to their letter by stating: “The US Treasury Department recently acknowledged significant US tax law changes would need to be made to the US global minimum tax (GILTI) in order to comply with the OECD agreement negotiated by Treasury.

“Despite the fact the United States remains the only country with a global minimum tax, the administration is using the OECD process to push for aggressive changes to GILTI — before any other country acts.

“In October 2021, representative Brady and Senator Crapo warned that compelling Congress to take specific legislative action undermines Congress’s taxing authority, and would ultimately make American companies less competitive globally.

“In September 2021, Brady and Crapo [US House Ways and Means Republican Leader representative Kevin Brady (R-TX) and US Senate Finance Committee Ranking Member senator Mike Crapo (R-ID)] sent a letter to their Democratic counterparts outlining serious concerns with the approach the Biden Administration has taken in international tax negotiations at the OECD.

“Brady and Crapo have consistently said the Administration should not negotiate for an agreement at the OECD that would target American companies or make them less competitive, ultimately resulting in fewer jobs, growth, and US investment.”

Led by representative Kevin Hern (R-OK), the members write: “We are concerned by the administration’s unilateral effort to commit the United States to global tax policies that could diminish the United States’ competitiveness on a global scale and have grave consequences for our domestic economy.”

They add: “It is a fool’s errand for the administration to engage in the OECD digitalisation tax agreement negotiations without substantive bipartisan input from tax-writing committees in the House and Senate.”

The members say they do not believe that the US Constitution permits the administration to bind the United States internationally to such policies without express congressional consent.

They write: “We urge the administration to work with Congress to examine the recent changes to international tax policy that it has embraced in this context before making additional undertakings to foreign countries that lack the congressional support necessary to be implemented at home."