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March 21, 2024

Senate Finance Committee holds hearing with Secretary Yellen

The March 21 Senate Finance Committee hearing with Treasury Secretary Janet Yellen on the President's FY2025 Budget proposal included discussion of the OECD BEPS 2.0 project, the costs of the project to the United States, and whether and how the two proposed pillars could be brought before Congress. There was also discussion about the pending business tax and Child Tax Credit (CTC) expansion bill and various aspects of the Inflation Reduction Act (IRA), including energy tax credits.

Chairman Ron Wyden (D-OR) said putting Republicans in power after the next election could jeopardize the IRA, including, "the funding for the IRS that has vastly improved customer service and cracked down on wealthy tax cheats." Separately, he noted it has been seven weeks since House passage of the Tax Relief for American Families and Workers Act (H.R. 7024) and reiterated prior comments that some businesses may not survive if lawmakers opt to put off dealing with the issues in the bill until 2025. In an effort to make the bill more to the liking of some Senate Republicans, Chairman Wyden said he has offered to take the CTC lookback provision — allowing the use of prior-year earnings to calculate the CTC — out of the bill, and that offer stands.

Likely referencing press reports that some Republicans have admitted they don't want a tax bill to pass this year, Chairman Wyden said, "I understand that some members prefer to wait and try to pass a bill next year. The reality is delay will have serious consequences. A lot of innovative small businesses — for whom the R&D provision in the bill is a lifeline — are telling me they aren't going to be around in 2025 if the Senate decides to wait. I also believe there are a lot more than 60 members who want us to act. So, I'm going to keep at it."

Ranking Member Mike Crapo (R-ID) said the Administration should have reservations about signing on to the OECD Pillar One Multilateral Convention (MLC). "The global tax code is not the only concerning part about the international tax negotiations: the Administration should have deep reservations about signing on to the OECD's global tax treaty at month's end. The Joint Committee on Taxation's recent analysis indicates the deal reduces revenue, fails to provide certainty or stability and would not halt discriminatory taxes targeting American companies, which was the sole impetus for entering the negotiations." He also said the IRA tax credits benefit foreign manufacturing and their cost has ballooned to $663 billion over 10 years.

In defense of the President's budget, and the OECD global minimum tax initiative, Sec. Yellen said: "President Biden and I continue to urge Congress to act so that the United States plays its part in the global minimum tax deal, which is currently being implemented in jurisdictions around the world to end the race to the bottom in corporate taxation. We have also proposed implementing a Billionaire Minimum Tax so that the top .01% pay their fair share; raising the tax on corporate stock buybacks to encourage businesses to reinvest profits in their workers and grow their companies; and closing estate and gift tax loopholes that allow wealthy Americans to pay less than they would otherwise owe."

Additional information is available in the attached WCEY Alert.

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Hearing with Secretary Yellen

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Contact Information

For additional information concerning this Alert, please contact:

Washington Council Ernst & Young

  • Any member of the group, at (202) 293-7474.