Want to receive this newsletter every weekday? Subscribe to POLITICO Pro. You’ll also receive daily policy news and other intelligence you need to act on the day’s biggest stories. SETTING THE STAGE: Republicans have given every indication that they mean serious businesses in the fight over the global minimum tax, having introduced two tax bills this Congress that would aggressively retaliate against any country that adopts the OECD framework and its enforcement mechanism — a so-called undertaxed profits rule (UTPR) that would allow a foreign country to “tax up” an American multinational to 15 percent if it has an effective rate of less than that. The first retaliatory measure GOP tax writers introduced would raise taxes on the U.S. income of companies and wealthy investors from UTPR-wielding countries by 5 percentage points each year, up to a whopping 20 percent penalty levy. The second, which was introduced last week by Ways and Means member Ron Estes (R-Kan.), would leverage an existing 10 percent minimum tax under the TCJA — expanding the levy and applying it to a much wider swath of companies that are connected to a country that has adopted the OECD framework. Of course, the bills don’t have a chance of passing Congress with Democrat control of the Senate, but they send a strong message to OECD officials overseas: If Republicans gain power in 2024, they’re prepared to go to war with any country that enacts “extraterritorial taxes” on American companies. Indeed, the OECD released new guidance last week that delays the UTPR until at least 2026, which was interpreted by several observers as a strategic calculation to give the U.S., specifically, breathing room to enact the global minimum tax as a part of a larger tax package in 2025. And here’s, perhaps, the most interesting part: While Republicans couldn’t enact those specific retaliatory measures without full control of Congress and the White House, a Republican president could wield a never-before used part of the tax code — which dates back to a tax spat with France in the 1930s — that allows the executive to unilaterally double taxes on citizens and companies from countries that impose “discriminatory or territorial taxes” on the U.S. THAT OTHER PILLAR: Meanwhile, the other major pillar of the OECD’s international tax framework, which would fundamentally change taxing rights over the digital economy and Big Tech companies like Google and Meta, has run into a hiccup presented, no less, by a U.S. ally: Canada. The OECD announced recently that it had secured promises from more than 130 countries to delay unilateral digital service taxes until the end of 2024 so that stakeholders can continue ironing out the deal. However, Canada insisted it would start slapping digital taxes on Big Tech at the beginning of next year. The latest news is that there’s some hope yet for a settlement. As our Doug Palmer reported, Deputy Canadian Minister Chrystia Freeland said Friday that a deal could be struck to alleviate the U.S.’s concerns: "I think there is a possibility of a path forward that works for everybody,” Freeland said. IRS UNDER MICROSCOPE: IRS Commissioner Danny Werfel hasn’t been long in his job but the agency is already grappling with controversies on multiple fronts, including testimony from two IRS whistleblowers before Congress last week on alleged interference in the Hunter Biden tax probe. While Werfel, under pressure from Republicans, did send out a memo earlier this month reminding employees of their right to make protected disclosures to Congress, Finance Committee member and co-founder of the Senate Whistleblower Protection Caucus Chuck Grassley (R-Iowa) said on Sunday that the commissioner’s stewardship of the agency is not proving sufficient in light of the allegations. “Director Werfel needs to start running the IRS instead of the IRS running him,” Grassley said in a tweet. “Protect whistleblowers instead of turning a blind eye to retaliation.” Noting that the two whistleblowers said they were removed from the Hunter Biden investigation after they came forward, Grassley also argued that Werfel should meet with the whistleblowers and put them back in the positions they had before. The IRS did not respond to a request for comment by press time.
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