[Congressional Record Volume 167, Number 184 (Wednesday, October 20, 2021)]
[Senate]
[Pages S7113-S7114]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]



                              The Economy

  Madam President, I have one other topic I want to address this 
afternoon, and it has to do with this really extraordinary and very 
reckless tax-and-spending spree that our Democratic colleagues seem 
determined to attempt to pass.
  Now, there has been a lot of focus, understandably, on the staggering 
size of this, right? Is this going to be the $3.5 trillion of the 
budget resolution that passed here and is that a compromise from $6 
trillion that some of our Democratic colleagues preferred or 7 
trillion--or will it be 1.5 or 2?
  OK. I would just say that there is no doubt in my mind, wherever this 
ends up, if it ends up anywhere, it is going to do a lot of damage. It 
is going to do a lot of damage to our economy. And I think that is 
probably why there are significant reservations, even among Democrats, 
and there is not any support among any Republicans for the various 
iterations of this bill.
  At the heart of it, what this bill does is several things, but one of 
them is to attempt to redefine the very role of the Federal Government 
in our society. And what I am referring to is the attempt to have the 
Federal Government provide the needs--like all kinds of basic needs, so 
basically anyone in the middle class--from cradle to grave. It is free 
pre-K, free childcare, free paid leave, free community college--oh, 
maybe that one got dropped. I mean, many of them aren't even means-
tested. They are not meant to be means-tested. If they are, you can 
have many multiples of the median family income and still qualify. It 
is all about making the middle class dependent on government. What a 
terrible idea.
  But I will have more to say on another occasion about the idea of 
putting the entire middle class on the dole. Instead, I want to focus 
for a minute on a particularly ill-conceived provision on the tax side 
of this because it has massive tax increases as part of this proposal. 
And one of them is the huge increase in the U.S. global minimum tax. 
When we did tax reform of 2017 and brought about the end of corporate 
inversions, among other things, we established a global minimum tax at 
a low rate of 10 percent.
  Now, what the Biden administration is proposing is going to 
completely upend the tax reform of 2017. We probably all remember the 
big announcements about this international agreement on multinational 
taxation. It consists of two pillars, as you may recall.
  Pillar 1 is this unprecedented change that would allow foreign 
countries to tax American companies based on the sales of the American 
companies into the foreign country. We have never had a tax policy 
based on that. You could tax the income of a company that is based in 
your country; you don't get to reach into the income of a company based 
in some other country.
  Many of our allies and friends around the world have long wanted to 
grab some income tax from American companies, and American 
administrations

[[Page S7114]]

have fought it. This administration has embraced it.
  It is a big revenue transfer from U.S. Treasury to the treasuries of 
other countries. Unsurprisingly, this feature--this pillar 1--has been 
a high priority for these other countries. As I say, they have long 
sought this source of money. That is pillar 1.
  Pillar 2 is an agreement by OECD countries to impose a 15-percent 
minimum tax on the foreign income of their multinational countries.
  Now, why was this important? Well, this is very important to the 
Biden administration because they want to raise the tax imposed on 
foreign income of U.S. multinationals, and they at least implicitly 
acknowledge that if foreign countries don't do likewise--if they don't 
have a very burdensome tax regime like we are going to create under the 
Biden plan--then we would be at a huge competitive disadvantage, and 
multinationals would have no choice but to flee the United States and 
many, many jobs going with them. So that is pillar 2.
  Now, here is one of the big problems with this whole arrangement, 
this whole negotiation. As I said before, the administration has 
implicitly acknowledged that if the rest of the world doesn't impose 
this huge minimum tax on their multinationals, we would be at a huge 
competitive disadvantage. That is why they negotiate with us. But there 
is a very real possibility that some of these countries--many of them--
may not implement a global minimum tax, despite the tentative 
agreement. And there are at least two reasons.
  One is, these countries have only reluctantly agreed to pillar 2 in 
the first place. They didn't think this was such a great idea, but they 
agreed to it in return for pillar 1--right?--in return for the 
commitment that they would be able to grab some of the tax revenue that 
we normally collect.
  There is a problem with that. Implementing pillar 1 requires changing 
the treaties--the multilateral or the bilateral tax treaties--that the 
United States has with these other countries. Changing the treaty 
requires a two-thirds vote in the Senate because under the 
Constitution, ratification of a treaty is subject to a two-thirds vote.
  Well, guess what. I don't think there is two-thirds of the U.S. 
Senate prepared to vote for this tax giveaway to these other countries. 
So if I am right, then pillar 1 never gets implemented. If pillar 1 
never gets implemented, then the sole motivation for these countries to 
raise their corporate global minimum tax goes away.
  So I am not sure how they square this circle. And at a minimum, I 
would think they ought to sort this out--the administration, that is--
before they just go ahead and put American companies at a huge 
competitive disadvantage.
  By the way, even if they get their way exactly, we are going to be at 
a huge competitive disadvantage. The best they could negotiate from 
OECD countries was a global minimum tax of 15 percent.
  Their own proposal has an effective global minimum tax rate of 26 
percent that we will be imposing on our own companies. That is a pretty 
big difference on the margin, and it creates an incentive to have your 
multinational headquartered somewhere other than the United States of 
America. That is a very bad idea.
  So I think there is a very substantial risk that when the 
administration gets wrapped around the axle because they are finding 
they can't get the two-thirds majority in the Senate for us to inflict 
this wound on ourselves--on our own economy--well, the rest of the 
world is going to rethink raising their minimum tax. And yet--and yet--
our Democratic colleagues seem determined to move ahead with this huge 
tax increase and all this spending. And who knows, maybe it passes any 
day now.
  But let me be clear, this is a destructive tax increase. It will hurt 
American workers, make the United States a less competitive place to do 
business, whether or not the rest of the world follows suit. And so I 
would just urge my colleagues, don't do this damage. I don't know what 
people think they are fixing.
  In 2019--just 1 year after the full implementation of our tax 
reform--we had the best economy of my lifetime. There was an end to 
corporate inversions. There was an economic boom. We had a record low 
unemployment rate--alltime record low unemployment for African 
Americans, Asian Americans, Hispanic Americans, women. Workforce 
participation rate was at multidecade highs. Wages were growing, and 
wages were growing fastest for the lowest income workers. Under our 
regulatory and tax reforms, we were narrowing the income gap and 
allowing Americans to create wealth and prosperity and achieve a higher 
standard of living.
  I ask my colleagues: What was so bad about that? What is really so 
bad about the best economy of my lifetime--rising wages, a better 
standard of living, and a narrowing of the income gap? What was so bad 
about that that you want to throw it out the door, out the window? I 
don't get that. I don't get that at all.
  It is not too late. Maybe we will be fortunate enough to be able to 
dodge this. But if we don't, a lot of families, workers, Americans of 
all walks of life will have a lower standard of living as a result of 
this very ill-conceived tax policy in the Biden administration.
  With that, I yield the floor.
  The PRESIDING OFFICER (Ms. Smith). The Senator from Wisconsin.
  (The remarks of Ms. Baldwin pertaining to the introduction of S. 3022 
are printed in today's Record under ``Statements on Introduced Bills 
and Joint Resolutions.'')
  The PRESIDING OFFICER. The Senator from Wyoming.