Trans-Atlantic relations

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Jul 05, 2022 View in browser   By Bernie Becker WELL, WELL, WELL: Congressional Republicans haven't exactly been shy in criticizing the global tax deal, and Democrats' efforts to comply with it. But this certainly seems to bump things up a level: A pair of senior GOP tax writers recently thanked Hungary for single-handedly blocking implementation in the EU of one of the two pillars of that tax agreement, a global minimum tax on multinational corporations. Those two Republicans, Reps. Adrian Smith of Nebraska and Mike Kelly of Pennsylvania, went a couple steps further even in their letter to Hungary's ambassador to the U.S., Szabolcs Takács, as Pro Tax's Brian Faler noted. Smith and Kelly knocked the Treasury Department for its negotiating priorities, reminded Takács that it would be up to Congress to implement the changes needed for the U.S. to get up-to-date with the global tax deal and asked the Hungarians if they'd like to discuss the matter further with GOP lawmakers. MORE ON THAT IN A BIT, but first thanks for coming to the "it's every pet's favorite day of the year" version of Weekly Tax. Perhaps fitting it has a birthday close to America's: Today marks 85 years since Hormel rolled out Spam — which apparently is a portmanteau of "spiced" and "ham." Help us get this newsletter processed and in the books. Email: bbecker@politico.com, bfaler@politico.com and teckert@politico.com. You can also reach us on Twitter at @berniebecker3, @tobyeckert, @brian_faler, @POLITICOPro and @Morning_Tax.   The Women Rule series brings together rising stars, accomplished professionals, and women at the pinnacle of their careers to inform, empower and connect women across diverse sectors and career levels. Attendance to our quarterly in-person POLITICO Women Rule meetings, is by invitation-only. Join our interest list and learn more here.     Want to receive this newsletter every weekday? Subscribe to POLITICO Pro. You'll also receive daily policy news and other intelligence you need to act on the day's biggest stories. GOING GLOBAL AGAIN: As it turns out, the Republicans might not have needed to ask Budapest if they wanted to talk more about the global agreement brokered through the Organization for Economic Cooperation and Development. Peter Szijjarto, Hungary's foreign minister and an ally of Prime Minister Viktor Orban, said in a recent interview that his government is "constantly consulting" with Republicans about the OECD deal, as The Washington Post's Jeff Stein reported. Not surprisingly, liberal tax experts weren't happy with Smith and Kelly's outreach to Hungary, basically arguing that the Republicans were undercutting their own government to service tax dodgers. Those more sympathetic to the GOP letter noted that it's a multilateral agreement, so it shouldn't be some huge incident if skeptics discussed their concerns together. Still, the letter did raise some interesting questions — like why didn't Smith and Kelly publicize the letter? (Neither posted it on their website, and news of the letter only trickled out days after it was sent.) Not to mention: Why were only two Republicans on a letter that lays out some pretty widespread GOP concerns about the global tax deal? For their part, Smith and Kelly said in a joint statement that they "proactively wrote this letter to the Hungarians to exchange concerns and identify potential areas of cooperation." But here's probably the most pressing question: Does this letter really affect Democrats' efforts to expand the U.S.'s existing minimum tax on the foreign income of domestic multinationals? Sen. Joe Manchin (D-W.Va.) and Senate Majority Leader Chuck Schumer continue to discuss a potential fiscal plan that would raise taxes, generate new revenues through prescription drug reforms, reduce deficits and enact new climate provisions. (Also up in the air: What to do about those expanded Obamacare subsidies that are about to expire?) Treasury Secretary Janet Yellen is among those pushing Democratic lawmakers to increase the rate on the levy on Global Intangible Low-Taxed Income (GILTI) to 15 percent and to apply it on a country-by-country basis as part of any agreement — updates that would put the U.S. in line with the OECD agreement that Yellen was crucial in getting across the finish line. Bloomberg reported last week that Democrats were considering dropping the country-by-country requirement from any deal. It's not clear if Manchin or Sen. Kyrsten Sinema (D-Ariz.) have any huge concerns about the trouble that Brussels is having with the minimum tax. But either way, it's hard to see how this newest letter might raise too many more questions for them. ABOUT THOSE MANCHIN-SCHUMER TALKS: Who knows how much longer this caveat will have, but one more time — it's still totally possible that the Manchin-Schumer talks bear fruit, and there's still time for everything to fall apart. But it is interesting that there does seem to be more detail spilling out about how exactly Democrats might pare back their revenue-raisers in a budget reconciliation deal. Latest case in point: Insider's Joseph Zeballos-Roig reported that a surtax on the very rich, put in the House-passed Build Back Better legislation last year after Sinema rejected increasing tax rates, is likely out of any final package. Sinema has since sounded unsure about whether she would have wanted that surtax to hit pass-through income, and there had been further chatter in recent weeks that a reconciliation measure might have a carveout for those businesses. Perhaps more to the point: Sinema's line for some time now is that she's agreed to more than enough revenue to find a deal — though it looks like she'd have to weigh in once more if Schumer and Manchin can get somewhere. As it stands, it looks like any Manchin-Schumer deal would have about $1 trillion in new revenues and about a half-billion dollars in benefits. So it might actually be a positive sign for a deal that there is more talk about how and specifically where the Democrats might be shrinking their tax increases. Still, don't forget the calendar: Lawmakers come back to Washington in a week, and then the House only has three scheduled weeks of voting until it breaks for August. So the time crunch is real.   DON'T MISS DIGITAL FUTURE DAILY - OUR TECHNOLOGY NEWSLETTER, RE-IMAGINED:  Technology is always evolving, and our new tech-obsessed newsletter is too! Digital Future Daily unlocks the most important stories determining the future of technology, from Washington to Silicon Valley and innovation power centers around the world. Readers get an in-depth look at how the next wave of tech will reshape civic and political life, including activism, fundraising, lobbying and legislating. Go inside the minds of the biggest tech players, policymakers and regulators to learn how their decisions affect our lives. Don't miss out, subscribe today.     Around the World DRAWING A LINE IN THE DIRT: India's revenue secretary says that the government will only get rid of a new windfall tax on oil producers if prices for crude take a big tumble , Reuters reports. Crude futures were well over $100 a barrel on Monday, and Tarun Bajaj says the current prices would need to drop by a good $40 per barrel for the government to feel comfortable dropping the windfall tax. The windfall tax took effect on July 1, and Bajaj said it would be reviewed every 15 days. The government hasn't released any public projections about how much revenue the windfall tax would raise. But economists at Kotak Mahindra Bank, based in Mumbai, have estimated that it could raise around 1 trillion rupees, or about $12.7 billion, if the tax is on the books through the current fiscal year, which ends in March. Those revenues would be enough to cover the costs of a recent excise duty cut on petrol, as Bloomberg noted. Around the Nation THE YEAR OF TAX CUTS WILL NEVER END: As expected, Gov. Mike Parson of Missouri vetoed a tax cut late last week. But as The Associated Press noted, the governor then followed up by pushing for a different tax cut — and he wants it quickly. Parson vetoed a tax rebate plan cooked up by his fellow Republicans in the legislature. Instead, he wants broad income tax cuts to go into effect by the start of 2023. Missouri has more than a half-dozen income tax brackets, but most income is taxed at the top rate of 5.4 percent. Parson is hoping to cut that rate down to around 4.7 percent, while also increasing the standard deduction to as much as $32,000 for joint filers and reducing the number of brackets. The governor has not said when he might want state lawmakers to return for a special session. Quick Links NYT: "76 Fake Charities Shared a Mailbox. The I.R.S. Approved Them All." Bloomberg: "UK PM and Chancellor Unified in Announcing 'Single Biggest Tax Cut in a Decade.'" New York Post: " Robert F. Smith still haunted by tax scandal after losing race for Denver Broncos: sources." Did You Know? Spam has six ingredients — pork with ham, salt, water, potato starch, sugar and sodium nitrite.   Follow us on Twitter Toby Eckert @tobyeckert Bernie Becker @berniebecker3 Brian Faler @brian_faler   Follow us

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