WASHINGTON, D.C. – On day one of his new administration, President Trump signed an executive order fighting back against unfair taxes imposed by foreign governments that harm American companies and workers. These taxes, which were supported by Democrats in their negotiated global tax surrender, make it better to be a foreign company or worker rather than an American one and represent a job-killing trade barrier for U.S. businesses. That’s why The One, Big, Beautiful Bill arms the Trump Administration with retaliatory measures so they can fight back.
Chairman Jason Smith (MO-08) issued the following statement:
“President Trump is putting America first and standing up for Americans against foreign governments who want to tax our workers and businesses unfairly, kill American jobs, and hand China an advantage. For the last two years, I and my fellow Ways and Means Republicans fought Democrats’ unconstitutional surrender of Congress’s tax writing authority, including traveling directly to meet with the Organization of Economic Cooperation and Development and foreign government officials to warn them that Congress will reject any scheme that undermines our tax sovereignty.
“The One, Big, Beautiful Bill provides President Trump with retaliatory countermeasures to use, consistent with his day one Executive Order to protect our economy from foreign taxes that unfairly target American workers and businesses. These countermeasures are precise and specific: If countries impose unfair taxes like those in the OECD plan, an incremental increase up to a 20 percent surtax will apply on certain income of companies and individuals from those countries. And as the Wall Street Journal recently noted, ‘only taxes that the U.S. currently imposes on foreigners can have the retaliatory surcharge added.’
“If these countries withdraw these taxes and decide to behave, we will have achieved our goal. It’s just common sense. I urge my colleagues in the Senate to move quickly to pass this bill and protect Americans from economic bad actors around the world.”
A recent Wall Street Journal editorial makes the argument for the provision:
The latest odd panic concerns Section 899, which would create a retaliatory tax on nationals of countries that impose “unfair foreign taxes” on American companies. Misunderstanding is now rife, but this isn’t a catch-all protectionist provision. House tax writers are trying to deter foreign taxes arising from the global corporate-tax harmonization project devised by the Organization for Economic Cooperation and Development and endorsed by the Biden Administration.
The OECD project includes a “pillar one” excess-profits tax on large, mostly American companies especially in tech and pharma, and a “pillar two” global minimum corporate-profits tax of 15%. Section 899 takes aim at governments that attempt to collect those taxes from U.S. companies—and only those taxes.
The provision specifies that it applies to foreign taxes that implement an “undertaxed profits rule” or a digital-services tax, both of which are hallmarks of the OECD plan. Section 899 applies up to a 20% surtax on U.S.-taxable income of companies and individuals from countries that impose the OECD taxes on U.S. firms.
The House bill explicitly excludes many other foreign levies such as Europe’s value-added taxes on consumption (a major bugbear of President Trump) from the definition of “unfair foreign tax.” Lawmakers took care not to hand any President or Treasury Secretary a blunt-force protectionist tool.
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We warned Europeans that Congress wouldn’t endorse the OECD plan and might fight back, and here we are.
The OECD plan is the real extralegal investment killer. It imposes onerous new compliance burdens in any jurisdiction that adopts the system and rides roughshod over most existing tax treaties (including those that other countries have with the U.S.). The complex rules in pillar two expose American companies to large-scale double taxation around the world. The Biden Treasury signed on because it wanted to end global tax competition from countries that have low corporate tax rates.
To read the rest of the editorial, click here.
Key Background:
January 2025: After President Trump issued a Day One executive order that reaffirmed Americans’ sovereignty over our own taxes and rejected the Biden Administration’s global tax surrender to the Organization for Economic Co-operation and Development (OECD) that put foreign governments in charge, Ways and Means Chairman Jason Smith (MO-08) praised the move.
READ: Smith Lauds President Trump’s Action Ending Biden’s Global Tax Surrender
April 2024: During a hearing with then-Treasury Secretary Janet Yellen, Chairman Smith questioned why the Biden Administration was trying to surrender America’s tax revenue and jobs to foreign countries. As he noted, “Congress writes the laws, not bureaucrats negotiating behind closed doors. This deal has no path forward in Congress.”
READ: Chairman Smith Opening Statement – Hearing with Treasury Secretary Yellen
March 2024: Tax Subcommittee Chairman Mike Kelly (PA-16) leads a hearing on OECD negotiations, noting the importance of putting America first.
WATCH: Tax Subcommittee Hearing on OECD Pillar 1: Ensuring the Biden Administration Puts Americans First
September 2023: In a meeting with the OECD as well as officials with the French and German finance ministries, members of the House Ways and Means Committee, led by Chairman Smith, made clear that countries that try to use the OECD global tax deal to steal away American jobs and tax revenues can expect economic consequences in the future.
READ: At OECD, Chairman Smith Warns That Congress Will Reject New Job-Killing Global Tax Surrender
July 2023: During a Ways and Means Tax Subcommittee hearing examining the OECD global tax scheme negotiated by the Biden Administration, Committee Members found the proposal would hurt American companies, kill American jobs, give Chinese Communist Party-sponsored businesses a global economic advantage, and surrender $120 billion in U.S. tax revenue. Rep. Ron Estes (KS-04) also introduced the Unfair Tax Prevention Act to discourage foreign countries from attacking U.S. jobs and tax revenues through the OECD’s Pillar 2 so-called Under Taxed Profit Rule surtax.
READ: Rep. Estes Introduces Legislation to Protect Americans from Unfair Taxes in Global Tax Pact
June 2023: In response to a request by Chairman Smith and Senate Finance Committee Ranking Member Mike Crapo (R-ID), the Joint Committee on Taxation (JCT) issued an analysis finding that the United States stands to lose over $120 billion in tax revenues under the OECD’s global minimum tax as negotiated by the Biden Administration.
READ: JCT: U.S. Stands to Lose Revenue Under OECD Tax Deal
May 2023: Chairman Smith introduced H.R. 3665, the Defending American Jobs and Investment Act, to prevent President Biden’s global tax surrender from killing American jobs, surrendering sovereignty over our tax code, and handing a competitive advantage to the Chinese Communist Party. The bill creates a reciprocal tax applicable to any foreign country that imposes unfair taxes on U.S. businesses and workers under the OECD’s global tax scheme.
READ: Ways and Means Republicans Introduce Bill to Combat Biden’s Global Tax Surrender
March 2023: The Ways and Means Committee held a hearing with then-Treasury Secretary Yellen, in which Chairman Smith noted, “President Biden’s global tax surrender to foreign governments will make it better to be a foreign worker or business than an American one. It’s a tax ‘deal’ only China could love.” The Ways and Means Subcommittee on Tax also held a hearing pushing back on the Biden Administration’s disastrous negotiations on tax with OECD.
READ: “U.S. Is Not a Piggy Bank for Europe’s Socialist Policies”
February 2023: During his first month leading the Committee, Chairman Smith warned the OECD Secretary General that the Biden Administration cannot override Congress’s constitutional tax-writing authority, and demanded he stop colluding with the Biden Administration to enact a global tax deal that will surrender American sovereignty, destroy American jobs, and hand China a global economic competitive advantage.
READ: Chairman Smith: Biden Administration Cannot Override Congress’s Constitutional Tax-Writing Authority
READ: Smith: OECD Must Stop Colluding with Biden Administration to Surrender American Sovereignty