There is “room to work together” to make changes in the international tax system that could lead to lighter burdens on some foreign income of U.S. companies, said Jack Lew, President Barack Obama’s nominee for Treasury secretary.
In response to questions from Senator Mike Crapo, an Idaho Republican, Lew emphasized that the administration supports a global minimum tax, which runs in the opposite direction. He spoke during his confirmation hearing in the Senate Finance Committee.
Under current law, the U.S. has a so-called worldwide tax system in which U.S. companies’ foreign income is taxed at the U.S. rate, though only when brought home and after foreign tax credits.
Other countries, such as the U.K., have switched to a so-called territorial system that lightens burdens on foreign income.
Lew’s comments suggested that the administration could support a system that is nominally “territorial” and include limits on companies’ ability to locate income in low-tax or no-tax countries. He said it depends on where the “dial” is set.
Lew said it would be challenging to get the corporate tax rate to 25 percent from 35 percent because of the amount of tax breaks that would have to be curtailed.