The end of the year is fast approaching without a clear picture of how the OECD and Inclusive Framework will reach an agreement reflecting the June G7 statement calling for a side-by-side system that would exempt US multinationals from certain Pillar Two global minimum tax rules, though progress is reportedly being made. There is also continued speculation that Republicans may revive the IRC Section 899 reciprocal tax proposal, which was dropped from the "One Big Beautiful Bill Act" (OBBBA).

Some recent press stories have checked in on the issue. The Bloomberg Daily Tax Report said October 28: "Countries are getting closer to finalizing the details on a deal that would exempt US companies from major parts of the 15% global minimum tax. People familiar with the OECD negotiations told Bloomberg Tax that countries have agreed the US won't get first taxing rights on American companies operating in foreign jurisdictions. The development marks a key concession by the US." Additionally, "OECD negotiators have also proposed more criteria to determine if a country's domestic tax system is eligible to be considered part of a so-called 'side-by-side regime,' which would exclude its companies from key minimum tax provisions."

Politico Morning Tax on October 27 cited Senator James Lankford (R-OK) as saying, "We have to get rid of Pillar Two. Period. Let's figure out the best way to be able to do it." Senate Finance Committee Chairman Mike Crapo (R-ID) and House Ways and Means Committee Chairman Jason Smith (R-MO) in June issued a joint statement saying, "Congressional Republicans stand ready to take immediate action if the other parties walk away from this deal or slow-walk its implementation." The Morning Tax report said, "House Republicans have taken a harder line against the global tax deal and sounded more willing to respond aggressively to Pillar Two than their Senate counterparts — further underscoring that GOP lawmakers could push back hard if the U.S. faces the full force of the minimum tax."

Members continue to keep an eye on international tax developments. In an October 27 statement, Chairman Smith, Subcommittee on Tax Chairman Mike Kelly (R-PA), and Subcommittee on Trade Chairman Adrian Smith (R-NE) addressed the topic of France considering a proposal to increase its digital services tax (DST) from 3% to 15% and raise the applicable revenue threshold to levels that specifically target American innovators, saying in part: "France's proposed increase in its digital services tax would be an unwarranted attack on America's digital companies and leave the U.S. Congress and the Trump Administration with little choice but to pursue aggressive retaliatory actions."

Tax Notes reported, "Republicans in Congress have been adamant that they won't tolerate any country imposing taxes that discriminate against U.S. companies, according to the statement. France adopted the DST in July 2019, applying it to revenue from digital interface services and targeted advertising services."

Congress — The government shutdown continues after more than four weeks. On October 27, the president of the American Federation of Government Employees, representing over 800,000 federal and D.C. government workers, released a statement saying, "it's time to pass a clean continuing resolution and end this shutdown today." The statement is seen as putting pressure on Senate Democrats, especially the four representing Maryland and Virginia (Senators Van Hollen, Alsobrooks, Warner and Kaine). Senate Minority Whip Dick Durbin (D-IL) said the union's position "has a lot of impact" in an October 28 Semafor report.

Also, on October 27, the Senate again failed to pass the House-passed continuing resolution (CR) to patch government funding until November 21 because of the partisan dispute over whether to attach an extension of enhanced Affordable Care Act (ACA) premium tax credits. The vote was 54-45, with the same three Democratic votes (Senators Cortez Masto, Fetterman and King, an independent who caucuses with Democrats) that were provided previously, and no additional Democrats supporting.

While the Administration has provided assurances that active-duty military members will receive scheduled paychecks this week, additional pressure points on the shutdown loom: the ACA enrollment period begins November 1 and funding for the Supplemental Nutrition Assistance Program (SNAP) may not be provided into November. According to U.S. Department of Agriculture (USDA) estimates, about 42 million Americans who rely on SNAP benefits through debit cards could lose those payments in November as contingency funds are depleted. A group of 25 states has filed a lawsuit seeking to compel the USDA to draw on a $5 billion emergency fund to cover SNAP benefits during the shutdown.

Today (October 29), the Senate Finance Committee holds a hearing on the nominations of:

• Arjun Mody to be Deputy Commissioner of the Social Security Administration
• Jeffrey Goettman to be a Deputy United States Trade Representative (Africa, Western Hemisphere, Europe, the Middle East, Environment, Labor and Industrial Competitiveness)
• Julie Callahan to be Chief Agricultural Negotiator, Office of the United States Trade Representative
• Thomas Bell to be Inspector General, Department of Health and Human Services

Trade — On October 28, the Senate approved by a 52-48 vote S.J.Res.81, the Kaine National Emergency Designation (Brazil Tariffs), to terminate the national emergency President Trump declared to impose duties on articles imported from Brazil. Republicans Susan Collins (R-ME), Mitch McConnell (R-KY), Lisa Murkowski (R-AK), Rand Paul (R-KY) and Thom Tillis (R-NC) voted in favor of the resolution. Under the International Emergency Economic Powers Act (IEEPA), the President can act to regulate international commerce when "an unusual and extraordinary threat … which has its source in whole or substantial part outside the United States" exists. The House is not expected to adopt the measure, which would have to be signed by President Trump to become effective.

"The vote — the first in a series of three expected resolutions aiming to block President Trump's tariffs on Brazil and Canada as well as his widespread global tariffs — comes amid bubbling tension in the Senate over how Trump's trade war has affected farmers and small businesses … " Politico reported. "Republican leaders in the House have blocked the chamber from voting to overrule the tariffs until March, protecting Republican members who are facing blowback from home state farmers and small businesses angry over the economic impact."

A rule for consideration of Washington DC-related bills (H. Res. 707) that was passed by the House on a party-line 213-211 vote on September 16 extends through March 31, 2026, a prohibition on congressional challenges to President Trump's tariffs. Specifically, the rule extends language addressing the counting of calendar days under the National Emergencies Act (NEA) with respect to a tariff-related declared emergency.

The New York Times reported, "While the resolution faces long odds in the House, where Republicans have taken extraordinary steps to make it more difficult to bring up such measures, the vote signaled bipartisan frustration with the president's tariffs on most goods from Brazil, a country with which the United States has a multibillion-dollar trade surplus."

A new WCEY publication, "Trade Lines | Policy intelligence for global business leaders," is available here.

Energy tax — Today (October 29), House Ways and Means Committee Democrats will hold a news conference to announce a new renewable energy bill to "restore U.S. clean energy leadership and lower energy costs."

Elections — House Ways and Means Committee member Randy Feenstra (R-IA) announced in a social media post, "I'm running to be the next Governor of Iowa to take our state to new heights." Another Ways and Means member, Rep. Dave Schweikert (R-AZ), is running for Arizona governor.