Skip to content
Federal Tax

Ways and Means Republicans Seek to Halt OECD Funding

Tim Shaw  

· 5 minute read

Tim Shaw  

· 5 minute read

Fundamental differences in taxation philosophies between Republican taxwriters and Organization for European Economic Co-Operation (OECD) prompted a group of House Ways and Means Committee members to advocate for stopping the United States’ voluntary contribution to the Paris-based organization.

In a letter to the chair and ranking member of the House Appropriations State Department Subcommittee, 10 Ways and Means Republicans wrote on March 24 that the OECD “has evolved into a venue that advocates against the economic interests of United States’ workers and business through its efforts to undermine legitimate, pro-growth tax competition.”

Touting the 2017 tax reform bill, the Tax Cuts and Jobs Act (TCJA; PL 115-97), the joint letter railed against the principles of the OECD two-pillar global anti-base erosion rules over concerns that foreign jurisdictions would put the U.S. at an economic disadvantage by “levying additional taxes on American companies.”

According to the Republican coalition, the U.S. funds a little over 19% of the portion of the OECD’s budget that is comprised of voluntary amounts appropriated by member states. The letter asks that the fiscal year 2024 State Department and Foreign Operations bill include language barring “any funding from being provided” to the OECD.

Pillar One of the OECD’s international tax framework, to which the Biden administration and about 140 countries have joined, would result in some companies paying more taxes in the countries where end users for a company’s products are located or digital users are, even if the company has no permanent local establishment in that country. Pillar Two is a 15% global minimum corporate tax. Although the OECD in February released guidance on how the global intangible low-tax income regime enacted under the TCJA meshes with Pillar Two, the majority on Ways and Means have maintained that the two-pillar plan deliberately targets U.S. taxpayers. Chair Jason Smith of Missouri told the OECD as much in a letter a week after the GILTI technical guidance was published.

The GOP in recent weeks has also been active in its opposition to President Biden’s trade agenda, focusing largely on the U.S.’s economic standing compared to China. A March 23 letter to Biden from another Republican coalition—with some members signing on that also were on the OECD-related letter—claimed that the U.S. “has come to a virtual standstill in competition for economic influence because of a focus on dialogues, frameworks, and limited agreements that lack meaningful enforcement mechanisms and market access commitments …” Smith shared similar points Friday in his opening statement Friday when Ways and Means held a hearing on the administration’s 2023 trade agenda, lumping in Biden’s tax and trade policies together as culprits for leaving “American workers on the sidelines.”

Checkpoint reached out to the Democratic minority of the House Appropriations Committee for comment on the prospect of ending OECD funding and whether the idea has gained traction among fellow budgeteers, but did not receive a response by press time.


Get all the latest tax, accounting, audit, and corporate finance news with Checkpoint Edge. Sign up for a free 7-day trial today.

More answers