The Biden administration’s international tax agenda suffered a setback when Sen. Joe Manchin rejected a 15% minimum tax on multinational companies this past week, dimming prospects of turning last year’s global tax agreement into reality.
Biden administration officials had planned to use Democratic fiscal legislation to enact the U.S. piece of the deal struck last year by Treasury Secretary Janet Yellen and more than 130 other countries. They wanted quick action to set a 15% minimum tax on U.S.-based multinational companies in each country where they operate, a move aimed at showing international leadership and prodding other countries to follow suit.
Mr. Manchin (D., W.Va.) was the pivotal vote, and he explained during a radio interview Friday his reluctance regarding the U.S. going first. His comments don’t officially kill the international tax changes. The White House has said talks will continue, though President Biden on Friday urged adoption of a narrower package focused on prescription drugs and healthcare.
Mr. Manchin has shifted his position at times during a long stretch of negotiation with Democratic leaders. As Democrats run out of time before November’s midterm elections, Mr. Manchin’s statements make it much less likely that the U.S. will adopt the 15% rate soon.
Now the administration must try to urge other countries to go first and hope that momentum, pressure and the potential for lost revenue can compel a future Congress to act.
Ms. Yellen told reporters Saturday in Nusa Dua, Indonesia, where she attended meetings with finance ministers from the Group of 20 major economies, that she was confident that other countries would proceed with the deal, eventually pulling the U.S. along.
“Whether we go first, second or later, the incentives exist for the United States to join this agreement, and we will push forward with every opportunity that we have,” she said.
A Treasury Department spokesman said the U.S. remains committed to the global minimum tax and will look at every avenue possible to get it done.
“We’re sort of at the moment of truth. A significant economy needs to move forward,” said Manal Corwin, a former Obama administration official who is now at KPMG. “The thing that is most likely to move this ahead would be the EU.” [Continue reading…]
Various administration officials have tried to court the senator. White House National Economic Council Director Brian Deese traveled in March to meet Manchin in West Virginia, where the two went zip-lining, according to CNN. Manchin went with Interior Secretary Deb Haaland to New River Gorge National Park in Glen Jean, W.Va., after which he posted photographs of them smiling together on social media.
John F. Kerry, the White House’s senior climate adviser, dined with Manchin in Paris this spring. Manchin talked frequently with Steve Ricchetti, one of the president’s top aides, and Klain personally apologized to Manchin for any misunderstandings after talks fell apart in December. Energy Secretary Jennifer Granholm traveled with Manchin to West Virginia in June to tout a plan to promote U.S. offshore wind projects. Granholm later said she was “bullish” about the prospect of a climate deal with Manchin’s approval.
None of those efforts kept Manchin onboard with Biden’s top priorities.
“I’m sure they are furious … It has to be disappointing; they keep moving closer to Manchin’s position and he keeps changing the position,” said Dean Baker, a liberal economist in communication with senior administration officials. “They’ve been trying to negotiate with good faith, recognizing Manchin’s concerns. But he keeps moving the ball, and it just looks like he took the ball home.”