Rep. Kelly questions Treasury Secretary Janet Yellen on Biden Administration negotiating tax deals without Congress

WASHINGTON, D.C. -- Today, U.S. Rep. Mike Kelly (R-PA), Chairman of the Ways & Means Subcommittee on Tax, questioned U.S. Treasury Secretary Janet Yellen on the Biden Administration's negotiations with the Organization for Economic Co-operation and Development's (OECD) on a proposed tax framework known as "Pillar 1" and "Pillar 2."

Since 2021, the Biden Administration and the Treasury Department have worked with OECD and foreign governments to craft these proposals and have not included Congress -- particularly the Ways & Means Committee, which oversees tax policy -- into the negotiations.

Secretary Yellen testified before the Ways & Means Committee during a hearing to examine President Biden's proposed FY2025 budget.

"The Biden Treasury Department has completely bypassed Congress and worked directly with OECD and foreign governments to craft these proposals,"Rep. Kelly said. "This is about U.S. economic security. These deals diminish the economic security of the United States during a time of global instability. Under the Biden Administration, inflation has soared by a total of 20% since 2021. Americans cannot afford 'Bidenomics.' They cannot afford bad tax and trade deals. And they cannot afford to have their elected officials pushed to the sidelines during global tax negotiations."

You can watch and download Rep. Kelly's exchange with Secretary Yellen here.

In June 2023, it was announced that the United States stands to lose over $120 billion in tax revenues under the Organization for Economic Co-operation and Development's (OECD) global minimum tax.

The United States produces 24 percent of global economic output, yet 48% of companies in scope under OECD Pillar 1 are American and U.S. employers represent 64% of profits to be reallocated. Pillar 1 includes the elimination of the digital service tax with the intention of establishing a fair global playing field. If Pillar 1 is enacted, this tax burden will fall disproportionally on American companies.

BACKGROUND

In 2021, the Biden Administration announced the beginning of OECD negotiations for a global minimum tax. OECD includes 145 countries around the world, including the United States. The Biden Treasury Department led these negotiations without frequent and significant input from Congress. A two-thirds majority is required in the U.S. Senate for enactment for Pillar 1.

Previously, Secretary Yellen acknowledged, if enacted, Pillar 1 would reduce U.S. tax revenues. Through the Pillar 1 negotiations, U.S. companies would bear far more than the fair share out of the 145 countries involved, confirmed by Joint Committee on Taxation estimates. More specifically, if Pillar 1 would have been in place in 2021, the U.S. would have lost $1.4 billion in revenue.

In July 2023, Rep. Kelly chaired a Tax Subcommittee hearing examining the impact of OECD's Pillar 2 on the United States. In June 2023, it was announced that the United States stands to lose over $120 billion in tax revenues over 10 years under the Organization for Economic Co-operation and Development's (OECD) global minimum tax - known as Pillar 2 - negotiated by the Biden Administration, according to an analysis by the Joint Committee on Taxation (JCT).

Additionally, JCT analysis shows OECD Pillar 1 would reduce tax revenues by over $40 billion over 10 years.

Further, President Biden has proposed $7 trillion in new taxes, largely by letting Trump-era tax cuts expire and raising corporate tax rates. This would be the biggest tax hike in history.