May 25, 2021 Senate Finance holds hearing on Batchelder nomination The May 25 Senate Finance Committee hearing on four Treasury nominations, including Lily Batchelder as Assistant Treasury Secretary for Tax Policy, featured significant discussion of international tax changes proposed by President Biden and the OECD BEPS 2.0 negotiations. Senator Rob Portman (R-OH) expressed concern about the Administration's proposal to double the global intangible low-taxed income (GILTI) rate to 21% — which, with the proposed retention of the 20% foreign tax credit (FTC) haircut for GILTI, would make the rate 26%-plus — and its effect on US companies' competitiveness. Ranking Member Mike Crapo (R-ID) expressed concerns about changing the GILTI rate ahead of an OECD agreement and in a May 24 letter asked Treasury Secretary Yellen for more information regarding Pillar 1 of the OECD BEPS 2.0 negotiations, including how many US companies would be affected, which companies would be treated as "in scope," the magnitude of profits that would be reallocated, and the effect on US tax revenues. Senator Mark Warner (D-VA) asked about the effect of the 10% deemed return for tangible assets for companies building factories in high-tax jurisdictions and the importance of a global minimum tax, and James Lankford (R-OK) raised concerns about potential exemptions for some countries. There was also discussion of narrowing the tax gap (or difference between taxes owed and paid), and Chairman Ron Wyden (D-OR) said he and colleagues would soon put forward a proposal on the issue, which has been targeted as an area of potential compromise with Republicans who oppose TCJA rollbacks to raise revenue for infrastructure investment. The Treasury Department May 20 released a report on President Biden's proposal to boost enforcement, information reporting, and IT, estimating that $460 billion could be raised from the information reporting piece. Additionally, Senator Sheldon Whitehouse (D-RI) announced that Chairman Wyden is trying to put together a proposal for a price on carbon emissions. In an opening statement, Chairman Wyden noted that with a clean energy markup May 26, work on changes to the international corporate tax system, working with the Treasury on the new child tax credits, and efforts to close the tax gap, the Committee will have a hand in several aspects of the President's economic agenda. Reflecting Republican resistance to changing the 2017 tax law to pay for infrastructure, Senator Crapo said that the TCJA "spurred economic activity and helped lead to historic lows in unemployment rates, particularly for minority workers, and robust wage growth that especially benefited low-wage workers. Reversing those gains with job-killing taxes is not the way to go." Some tax questions were also directed to Jon Davidson, the nominee to be Deputy Under Secretary of The Treasury with a role in Treasury's interactions with Congress. Statements and testimony are available here. Senator Crapo's letter to Secretary Yellen is available here. Additional details are available in the attached Tax Alert. ———————————————
——————————————— Hearing on Batchelder nomination
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