[House Report 117-518]
[From the U.S. Government Publishing Office]


117th Congress    }                                  {       Report
                        HOUSE OF REPRESENTATIVES
 2d Session       }                                  {      117-518

======================================================================

 
   RESOLUTION OF INQUIRY DIRECTING THE SECRETARY OF THE TREASURY TO 
PROVIDE CERTAIN DOCUMENTS IN THE SECRETARY'S POSSESSION TO THE HOUSE OF 
REPRESENTATIVES RELATING TO THE IMPACT OF THE OECD PILLAR ONE AGREEMENT 
                     ON THE UNITED STATES TREASURY

                                _______
                                

 September 28, 2022.--Referred to the House Calendar and ordered to be 
                                printed

                                _______
                                

Mr. Neal, from the Committee on Ways and Means, submitted the following

                             ADVERSE REPORT

                             together with

                            DISSENTING VIEWS

                      [To accompany H. Res. 1269]

    The Committee on Ways and Means, to whom was referred the 
resolution (H. Res. 1269) of inquiry directing the Secretary of 
the Treasury to provide certain documents in the Secretary's 
possession to the House of Representatives relating to the 
impact of the OECD Pillar One agreement on the United States 
Treasury, having considered the same, reports unfavorably 
thereon without amendment and recommends that the resolution 
not be agreed to.

                                CONTENTS

                                                                   Page
  I. SUMMARY AND BACKGROUND...........................................2
          A. Purpose and Summary.................................     2
          B. Background and Need for Legislation.................     2
          C. Legislative History.................................     3
 II. EXPLANATION OF THE BILL..........................................3
III. VOTES OF THE COMMITTEE...........................................3
 IV. BUDGET EFFECTS OF THE BILL.......................................4
          A. Committee Estimate of Budgetary Effects.............     4
          B. Statement Regarding New Budget Authority and Tax 
              Expenditures Budget Authority......................     4
          C. Cost Estimate Prepared by the Congressional Budget 
              Office.............................................     4
  V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE.......4
          A. Committee Oversight Findings and Recommendations....     4
          B. Statement of General Performance Goals and 
              Objectives.........................................     4
          C. Information Relating to Unfunded Mandates...........     5
          D. Advisory Committee Statement........................     5
          E. Applicability to Legislative Branch.................     5
          F. Congressional Earmarks, Limited Tax Benefits, and 
              Limited Tariff Benefits............................     5
          G. Hearings............................................     5
          H. Applicability of House Rule XXI, Clause 5(b)........     5
          I. Tax Complexity Analysis.............................     5
          J. Duplication of Federal Programs.....................     6
 VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED............6
VII. DISSENTING VIEWS.................................................7

                       I. SUMMARY AND BACKGROUND


                         A. Purpose and Summary

    H. Res. 1269 requests that the Department of the Treasury 
provide the House of Representatives information that refers or 
relates to (1) United States Pillar One tax revenue modeling 
data and reports estimating the impact of the OECD Pillar One 
agreement on reallocating taxing rights from the United States 
to foreign jurisdictions, or (2) the economic effects of the 
OECD Pillar One agreement on the U.S. Treasury.

                 B. Background and Need for Legislation

    On July 26, 2022, H. Res. 1269 was introduced by 
Representative Kevin Hern. H. Res. 1269 is a resolution of 
inquiry, which is a means infrequently used by the House of 
Representatives to obtain certain factual information from the 
Executive Branch. Under clause 7 of rule XIII, a resolution of 
inquiry is subject to a motion to discharge from committee if 
the resolution is not reported by the committee to which it was 
referred within 14 legislative days of its introduction. 
Accordingly, the Committee on Ways and Means scheduled a markup 
of H. Res. 1269 within the 14-day period.
    In October 2021, the member countries of the OECD/G20 
Inclusive Framework on Base Erosion and Profit Shifting (BEPS) 
issued a statement describing a two-pillar international tax 
reform. This statement was agreed to by every major global 
economy, including the United States.
    Pillar One of the two pillar international tax reform 
consists of Amount A and Amount B. Amount A would provide for 
the re-sourcing of revenue from large, highly profitable large 
multinational enterprises to the end market jurisdiction where 
goods or services are used or consumed. Amount B would provide 
a simplified approach to applying the arm's length principle to 
in-country baseline marketing and distribution activities. 
Pillar One implementation would include a binding agreement 
among the participating states to eliminate unilateral measures 
that discriminate against U.S. companies.
    In July 2022, the OECD Secretariat published a progress 
report on Pillar One. The public consultation document included 
several policy options and questions in respect to Amount A of 
Pillar One and invited the public to comment on the questions 
raised in the progress report. In September 2022, the OECD 
hosted a public consultation meeting focused on these 
questions.
    The Committee reported the resolution adversely because, 
among other flaws, no agreement has been reached among the 
members of the Inclusive Framework concerning key elements of 
either Amount A or Amount B of Pillar One. Key parameters of 
the Pillar One agreement have yet to be reached, and as such 
any estimate of the revenue impact would be premature. The 
resolution also refers only to the revenues allocated from the 
United States to foreign jurisdictions but does not take into 
account revenue allocated either from foreign jurisdictions to 
the United States or among non-U.S. jurisdictions. In addition, 
it does not take into account the economic benefits of greater 
tax certainty or the benefits from ending tax measures that 
discriminate against U.S. companies. For these reasons, the 
Committee reported the resolution adversely.

                         C. Legislative History


Background

    H. Res. 1269 was introduced on July 26, 2022, by Rep. Kevin 
Hern and was referred to the Committee on Ways and Means.

Committee hearings

    The Committee on Ways and Means held no hearings on H. Res. 
1269.

Committee action

    The Committee on Ways and Means marked up H. Res. 1269 on 
September 20, 2022, and ordered the resolution adversely 
reported (with a quorum being present) by a roll call vote.

                      II. EXPLANATION OF THE BILL

    H. Res. 1269 directs the Secretary of the Treasury to 
provide to the Committee within 14 days copies of all documents 
in its possession that refer to the economic impact of the 
adoption of Pillar One agreement to reallocate certain tax 
rights under Pillar One of the OECD Global Agreement, including 
documents that relate to data or reports on modeling the 
reallocation of tax rights as well as any documents that refer 
to the economic effect on the United States Treasury.

                      III. VOTES OF THE COMMITTEE

    Pursuant to clause 3(b) of rule XIII of the Rules of the 
House of Representatives, the following statement is made 
concerning the vote of the Committee on Ways and Means in its 
consideration of H. Res. 1269 on September 20, 2022.
    The resolution, H. Res. 1269, ``Of inquiry directing the 
Secretary of the Treasury to provide certain documents in the 
Secretary's possession to the House of Representatives relating 
to the impact of the OECD Pillar One agreement on the United 
States Treasury,'' was ordered adversely reported to the House 
of Representatives by a recorded vote (with a quorum being 
present) of 24 yeas to 16 nays.

----------------------------------------------------------------------------------------------------------------
         Representative             Yea       Nay     Present     Representative      Yea       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Doggett....................        X   ........  .........  Mr. Brady........  ........        X   .........
Mr. Thompson...................        X   ........  .........  Mr. Buchanan.....  ........        X   .........
Mr. Larson.....................        X   ........  .........  Mr. Smith (NE)...  ........        X   .........
Mr. Blumenauer.................        X   ........  .........  Mr. Kelly........  ........        X   .........
Mr. Kind.......................        X   ........  .........  Mr. Smith (MO)...  ........        X   .........
Mr. Pascrell...................        X   ........  .........  Mr. Rice.........  ........        X   .........
Mr. Davis......................        X   ........  .........  Mr. Schweikert...  ........        X   .........
Ms. Sanchez....................        X   ........  .........  Mr. LaHood.......  ........        X   .........
Mr. Higgins....................        X   ........  .........  Dr. Wenstrup.....  ........        X   .........
Ms. Sewell.....................  ........  ........  .........  Mr. Arrington....  ........        X   .........
Ms. DelBene....................        X   ........  .........  Dr. Ferguson.....  ........  ........  .........
Ms. Chu........................        X   ........  .........  Mr. Estes........  ........        X   .........
Ms. Moore......................        X   ........  .........  Mr. Smucker......  ........        X   .........
Mr. Kildee.....................        X   ........  .........  Mr. Hern.........  ........        X   .........
Mr. Boyle......................        X   ........  .........  Mrs. Miller......  ........        X   .........
Mr. Beyer......................        X   ........  .........  Dr. Murphy.......  ........        X   .........
Mr. Evans......................        X   ........  .........  Mr. Kustoff......  ........        X   .........
Mr. Schneider..................        X   ........  .........  .................  ........  ........  .........
Mr. Suozzi.....................        X   ........  .........  .................  ........  ........  .........
Mr. Panetta....................        X   ........  .........  .................  ........  ........  .........
Mrs. Murphy....................        X   ........  .........  .................  ........  ........  .........
Mr. Gomez......................        X   ........  .........  .................  ........  ........  .........
Mr. Horsford...................        X   ........  .........  .................  ........  ........  .........
Ms. Plaskett...................        X   ........  .........  .................  ........  ........  .........
Chairman Neal..................        X   ........  .........  .................  ........  ........  .........
    Totals.....................       24   ........  .........      Totals.......  ........       16   .........
----------------------------------------------------------------------------------------------------------------

                     IV. BUDGET EFFECTS OF THE BILL


               A. Committee Estimate of Budgetary Effects

    In compliance with clause 3(d) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
Congressional Budget Office did not provide a cost estimate of 
the resolution.

B. Statement Regarding New Budget Authority and Tax Expenditures Budget 
                               Authority

    Pursuant to clause 3(c)(2) of rule XIII of the Rules of the 
House of Representatives, the Committee states that the 
resolution involves no new or increased budget authority. The 
Committee further states that the resolution involves no new 
tax expenditure.

      C. Cost Estimate Prepared by the Congressional Budget Office

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the Committee advises that the 
Congressional Budget Office did not provide a cost estimate of 
the resolution.

     V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE


          A. Committee Oversight Findings and Recommendations

    With respect to clause 3(c)(1) of rule XIII and clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
the Committee made findings and recommendations that are 
reflected in this report.

        B. Statement of General Performance Goals and Objectives

    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
resolution does not authorize funding, so no statement of 
general performance goals and objectives is required.

              C. Information Relating to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
    The Committee has determined that the resolution does not 
contain Federal mandates on the private sector. The Committee 
has determined that the resolution does not impose a Federal 
intergovernmental mandate on State, local, or tribal 
governments.

                    D. Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by the 
resolution.

                 E. Applicability to Legislative Branch

    The Committee finds that the resolution does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of section 
102(b)(2) of the Congressional Accountability Act.

  F. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
                                Benefits

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the resolution, and states that the 
provisions of the resolution do not contain any congressional 
earmarks, limited tax benefits, or limited tariff benefits 
within the meaning of the rule.

                              G. Hearings

    In relation to compliance with clause 3(c)(6) of rule XIII 
of the Rules of the House of Representatives, the Committee 
states that no hearings were held on this resolution.

            H. Applicability of House Rule XXI, Clause 5(b)

    Clause 5(b) of rule XXI of the Rules of the House of 
Representatives provides, in part, that ``It shall not be in 
order to consider a resolution, joint resolution, amendment, or 
conference report carrying a retroactive Federal income tax 
rate increase.'' The Committee, after careful review, states 
that the resolution does not involve any retroactive Federal 
income tax rate increase within the meaning of the rule.

                       I. Tax Complexity Analysis

    Section 4022(b) of Pub. L. No. 105-266, the Internal 
Revenue Service Restructuring and Reform Act of 1998 (the 
``RRA''), requires the staff of the Joint Committee on Taxation 
(in consultation with the Internal Revenue Service and the 
Treasury Department) to provide a tax complexity analysis. The 
complexity analysis is required for all legislation reported by 
the Senate Committee on Finance, the House Committee on Ways 
and Means, or any committee of conference if the legislation 
includes a provision that directly or indirectly amends the 
Internal Revenue Code of 1986 and has widespread applicability 
to individuals or small businesses.
    Pursuant to clause 3(h)(1) of rule XIII of the Rules of the 
House of Representatives, the staff of the Joint Committee on 
Taxation has determined that a complexity analysis is not 
required under section 4022(b) of the RRA because the 
resolution contains no provision that amends the Internal 
Revenue Code of 1986 and has ``widespread applicability'' to 
individuals or small businesses within the meaning of the rule.

                   J. Duplication of Federal Programs

    In compliance with clause 3(c)(5) of rule XIII of the Rules 
of the House of Representatives, the Committee states that no 
provision of the resolution establishes or reauthorizes: (1) a 
program of the Federal Government known to be duplicative of 
another Federal program; (2) a program included in any report 
to Congress pursuant to section 21 of Pub. L. No. 111-139; or 
(3) a program related to a program identified in the most 
recent Catalog of Federal Domestic Assistance, published 
pursuant to section 6104 of title 31, United States Code.

       VI. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    Pursuant to clause 3(e)(1)(B) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that H. 
Res. 1269 does not make any changes to existing law.

                         VII. DISSENTING VIEWS

    Committee Republicans strongly oppose the Committee's 
action of unfavorably reporting H. Res. 1269, Resolution of 
inquiry directing the Secretary of the Treasury to provide 
certain documents in the Secretary's possession to the House of 
Representatives relating to the impact of the OECD Pillar One 
agreement on the United States Treasury.
    Congressional oversight is one of the most important 
responsibilities of the U.S. Congress, and Resolutions of 
Inquiry (ROIs) are one of the methods used by the U.S. House of 
Representatives to obtain information from the executive 
branch. ROIs simply demand that the administration turn over 
basic information to Congress. This information is critical 
because it allows the Congress the ensure the executive 
branch's compliance with congressional intent; evaluate program 
performance; prevent the executive branch's encroachment on the 
legislative branch's powers; assess an agency's ability to 
manage and carry out program objectives; and acquire 
information from the executive branch that can inform 
policymaking.
    Moreover, Congressional Republicans have repeatedly sought 
information from the Administration about the expected and 
actual impact of these policies. Transparency is essential 
because it promotes accountability and provides information for 
the Congress and Americans about what the federal government is 
doing. Despite the Biden Administration stating that President 
Biden would ``bring transparency and truth back to the 
government to share the truth, even when it's hard to hear,'' 
the Administration has ignored the need for congressional 
oversight and completely failed on its promise. The American 
people deserve to know how their government works and we will 
hold the Biden Administration accountable for its disastrous 
policies.
    This ROI seeks information about how much U.S. corporate 
taxing rights will be sent overseas by the Biden Administration 
in ongoing international tax negotiations. On April 8, 2021, 
without consulting Republicans in Congress, the Biden 
Administration proposed an agenda to the steering group of the 
Inclusive Framework at the Organisation for Economic 
Cooperation and Development (OECD) that included a new proposal 
for the scope of Pillar One to target about 100 of the largest 
and most profitable companies. It was concluded that the scope 
of the agreement should apply to companies with more than 20 
billion Euro in global revenue and more than a 10 percent 
profitability threshold. These proposals were included in 
internal OECD Secretariat Documents for the Task Force on the 
Digital Economy as early as April 27, 2021, and the official 
OECD inclusive framework statement on July 1, 2021.
    Committee Republicans first requested information on this 
issue from the U.S. Department of Treasury on April 28, 2021. 
Despite repeated requests for this information from 
Congressional Republicans to various officials at the U.S. 
Department of Treasury between April 2021 to August 2022 via 
questions from Committee staff in briefings and emails, 
questions from Members of Congress at hearings, questions for 
the record, and letters, the Administration has not provided 
Congress with the requested information.
    The Majority claimed that the Treasury Department has made 
progress on the Pillar One agreement that would eliminate 
discriminatory digital service taxes targeting U.S. companies. 
While this is the goal that both parties in Congress tasked the 
Treasury Department with achieving at the OECD, all publicly 
available information suggests the Department has failed in 
their attempt. Academic studies suggest that the Biden 
Administration's Pillar One agreement will serve to perpetuate 
the discrimination against U.S. companies. Studies suggest that 
around 64 percent of reallocated income is from U.S. 
headquartered multinationals, while U.S. Gross Domestic Product 
(GDP) only represents about 24 percent of Global GDP.\1\ This 
misrepresentation by the Treasury Department is precisely why 
it is important for the Congress to have access to the data and 
estimations that the Treasury Department is using to evaluate 
the outcome of their negotiations. We need to understand if the 
Treasury Department is finding a favorable solution for U.S. 
industry, or if they are reaching a conclusion that the 
Congress cannot accept.
---------------------------------------------------------------------------
    \1\ Michael Devereux and Martin Simmler, Who Will Pay Amount A?, 5 
EconPol Policy Brief (2021).
---------------------------------------------------------------------------
    The Majority went on to cite, that with so many fluid 
elements the estimations would be based on premature 
assumptions about the details of the agreement, as a reason the 
Treasury Department need not share its analysis with the 
Congress. We find this argument without merit and an 
inexcusable resignation of our Constitutionally assigned 
authority. As the committee responsible for tax legislation in 
the chamber that must originate legislation for raising revenue 
we should have the necessary information to understand what is 
being considered. The Congress cannot properly signal our 
support or dissatisfaction with an agreement without an 
understanding of the underlying assumptions or statistical 
analysis. Without understanding where the Treasury Department 
is in the process, we cannot direct the Department to change 
course if appropriate. It is the Congress that has the power to 
lay and collect taxes, and while the Administration may have a 
diplomatic role in facilitating cross-border tax cooperation, 
the Administration should not deny the Congress essential 
information to evaluate proposals of significant resignations 
of taxing rights to other countries.
    Finally, the Majority argued that this resolution does 
nothing to help American families put food on the table, pay 
their bills, or take care of their families. In fact, this 
resolution goes to those very concerns. If the Administration 
is proposing to cede taxing rights to other countries, the 
result is a narrower tax base here in the U.S. As a result, it 
will fall to American families to shoulder more of the effects 
of the U.S. tax burden to raise the same amount of revenue to 
fund the essential services of our government. Families are 
already suffering under President Biden's punishing economic 
policies. We fear a continuation of misguided policies will 
make things worse for American families whose paychecks can no 
longer cover their needs.
    As the branch of government responsible for prescribing tax 
policy, it is essential that Congress receive revenue and 
company inclusion estimates. To be able to evaluate the 
proposal Congress needs to know what companies will be 
affected, what jurisdictions will be losing tax rights, and 
what jurisdiction will be gaining taxing rights under the 
current proposals. More broadly, Congress should understand 
where U.S. companies may be sending profit taxing rights and 
how it could factor into larger geopolitical considerations. It 
is wholly impossible for Congress to do its job with regards to 
Pillar One without an understanding of the proposed shifts in 
inflows and outflows. If the Administration continues to 
deprive Congress of this essential information, the ultimate 
harm will fall on U.S. negotiators losing credibility abroad. 
It is disappointing that Committee Democrats have blocked the 
request for this information.
                                   Kevin Brady,
                                           Ranking Member.
                                   Kevin Hern.

                                  [all]