BACK TO THE GLOBAL TAX DEAL: Of course, there is at least one good reason why Republicans would focus so much on the global tax deal — unlike many of the tax proposals in the Biden tax budget, it’s more than just theoretical right now. That’s because, as both Yellen and GOP lawmakers noted, other governments are in the process of implementing the global minimum tax right now — something that could affect the bottom lines of big U.S. multinationals, because of a provision that would allow those other governments to tax them if the companies’ domestic effective tax rate fell below that 15 percent threshold. The repeated back-and-forth between Yellen and GOP tax writers also revealed that, in many ways, the two sides appear to be talking past each other on the global tax deal. While Republicans stressed that the agreement wasn’t going anywhere on their watch, Yellen suggested that, to her knowledge, at least one of the big impediments to implementation had been swept away. “My understanding is that there were members of Congress that did not want the United States to go first in implementing a 15 percent minimum tax,” Yellen said, noting how the EU, the U.K. and Japan are moving toward adopting the global minimum tax. “So the issue of our going first and will others follow no longer exists.” Final point: Sen. Joe Manchin (D-W.Va.) famously — at least in tax circles — stood in the way last year of bolstering GILTI and getting the U.S. up to speed on the global minimum tax. Friday’s Ways and Means hearing suggested that, if nothing else, pushing for action on the global tax deal still isn’t top of mind for other Democrats, either. Rep. Lloyd Doggett (D-Texas), a reliable progressive, did back Yellen up on the deal and helped push back on the GOP charges that the agreement would help out rivals like China. But Rep. Brad Schneider (D-Ill.), more of a centrist, had his own gently skeptical comments for the Treasury secretary about the agreement, praising the work of the administration on the issue — but also stressing the need for "protecting the competitiveness of U.S. firms." Added reading: “House GOP’s tax chief grills Yellen on injecting ‘woke’ politics into tax administration,” via Pro Tax’s Benjamin Guggenheim. ANOTHER AREA OF DEBATE: GOP tax writers also continued to pound Democrats for giving the IRS that extra $80 billion in funding during last year’s Inflation Reduction Act — and to argue that, despite Yellen’s statements to the contrary, that people making under $400,000 a year would face a substantially higher chance of getting audited. Ways and Means Chair Jason Smith (R-Mo.) added that he couldn’t believe that the White House would then follow that up by asking for tens of billions of dollars more for the IRS in the budget. And the House Freedom Caucus pushed its way into the debate on Friday as well, issuing a list of demands for raising the debt limit that included pulling back on that $80 billion in funding for the tax collector. But for their part, the GOP attacks on the IRS still don’t seem to have fazed Democrats. In fact, Democrats might even feel more emboldened about defending the new funding given the improvements that the agency has made in customer service this tax filing season. The IRS “has been severely underfunded at the hands of Republican budget cuts for over a decade, and with the infusion of Democratic support, 99.7 percent of returns have been processed and more Americans are getting the service they deserve,” said Rep. Richard Neal of Massachusetts, the top Democrat on the Ways and Means Committee.
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