Senate Finance Chairman Ron Wyden (D-Ore.) on Thursday said in the coming days he intends to release a document on international tax proposals, but where it goes from there is unclear.
“I’ll be releasing a new framework for international taxation that reverses the Trump-era handouts to multinationals,” he announced while holding a committee hearing on international tax policy.
Senators Sherrod Brown (D-Ohio) and Mark Warner (D-Va.), both members of the Senate Finance Committee, will help create the tax document. It will be circulated to other Senators for feedback on how to sculpt the nation’s international tax code. That document will then become the basis for legislation that Wyden hopes to introduce later this year.
“We’re going to focus on policies that will actually make us more competitive, attract more investment – high skill, high wage jobs, and do it in a way that won’t blow up the budget,” Wyden said, referring to the 2017 tax reform law that was projected to increase the deficit by roughly $1.7 trillion over ten years.
During today’s hearing, Wyden offered very little insight into what international tax provisions will be included in his proposal, but he did mention that the current law for research and development outlays needs to be retooled.
Currently, companies can expense R&D costs, but that changes in 2022. Next year, the 2017 tax reform law will require companies to amortize their R&D costs over five years. Wyden wants to change that law.
“Dis-incenting research and development, making it more attractive to do business overseas are losers. This is an area that needs change,” he said.
Wyden also said that the corporate income tax rate should be increased and took issue with people who contend that a low rate makes the nation more competitive with foreign opponents.
“I really get the sense that a number of Republicans see that [the word “competitiveness”] as code for big corporations, mega corporations, to pay little or no taxes,” he said.
Wyden did not offer a concrete timeline for when he would introduce his legislation, but it is not expected to be included in the upcoming recovery/infrastructure bill that President Joe Biden hopes to sign into law later this year.
In fact, the fate of Wyden’s international tax proposal is quite unclear. House Ways and Means Chairman Richard Neal (D-Mass.) – who’s committee is constitutionally charged with creating tax law – said that Democrats on Capitol Hill are not unified on moving forward with legislation modifying international tax policy.
“The Caucus isn't united on this,” he recently told a tax interest group.
Without the backing of the Ways and Means Chairman, it will be a heavy lift for Wyden to turn his legislation into law.