June 2 (Bloomberg) -- The top Republican tax writers in Congress joined the biggest U.S.-based companies in warning that global negotiations to limit businesses from shifting profits to low-tax countries could harm Americans.
Representative Dave Camp and Senator Orrin Hatch said in a joint statement today that other governments may be using the talks at the Organization for Economic Cooperation and Development as a way to “raid the American Treasury.”
“We are willing to work through these issues until an international consensus exists and we have achieved the right answer, but we will not be rushed into a bad outcome,” said Camp, chairman of the House Ways and Means Committee, and Hatch, the top Republican on the Senate Finance Committee.
The comments by Camp, of Michigan, and Hatch, of Utah, reflect growing concern by U.S. companies of the OECD’s Base Erosion and Profit Shifting initiative. Their big worry is that the OECD -- or countries acting alone -- could redefine the rules for where income is taxed, subjecting U.S. companies to higher taxes abroad.
Such levies, they contend, may shrink the U.S. tax base and raise costs for U.S.-based companies.
They issued the statement as OECD officials gathered in Washington for a conference on the plan. The OECD, made up of many major developed countries, is trying to reach a consensus on international tax rules, which would be followed by countries enacting their own laws to follow the guidelines.
At the conference, officials from the U.K., U.S. and OECD said they were having trouble reaching consensus on many issues. Difficult topics include how to decide where income is earned and how to prevent companies from taking advantage of gaps in rules that may leave some income untaxed anywhere.
“The hard bargaining that we’re engaged in is a sign that it’s real,” said Mike Williams, director of business and international tax for the U.K. Treasury.
Earlier today, the Business Roundtable, an association of chief executives of U.S. companies, issued a similar warning.
“At a minimum, the project is increasing business uncertainty on the taxation of cross-border income,” wrote Louis Chenevert, chairman and chief executive officer of United Technologies Corp., in a letter to Treasury Secretary Jacob J. Lew. “At its worst, it will result in the imposition of new, unprecedented taxes on trade and investment that will freeze business investment and slow economic growth.”
The U.S. Treasury is trying to help other countries reach a consensus while defending the U.S. tax base and U.S.-based companies that have been criticized in Europe.
Robert Stack, the U.S. Treasury’s top negotiator, said at the conference that he’s sometimes in the position of being the person resisting consensus.
“This has been a very, very challenging project,” he said.
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