House Tax Package Doubles Down on Tax Breaks for Multinational Corporations

Failure to Adopt International Corporate Tax Reforms Foregoes Hundreds of Billions in Revenue

WASHINGTON, DC – Today, the House Ways and Means Committee is considering a tax package that would extend most provisions of the 2017 tax bill and introduce additional tax cuts largely benefiting high-income individuals and large corporations. The full House package includes more than $5.6 trillion in new and extended tax breaks, proposed to be partly paid for by cuts to vital health and food programs, repealing green energy tax credits, taxing remittances, and raising taxes on certain nonprofit organizations.

“By refusing to implement common sense tax reform for corporations – and, in particular, for large multinational corporations – the House tax package paves the way for a final reconciliation bill that will see devastating cuts to essential health services, major climate rollbacks, and a ballooning national deficit,” said Ian Gary, executive director of the FACT Coalition. “Prioritizing the needs of huge multinational corporations that continue to avoid taxes and offshore American jobs over ordinary people is not only fiscally irresponsible: it is simply wrong.”

Among the corporate tax provisions included in the Ways and Means Committee’s draft bill are permanent extensions of the discounted tax rate paid by U.S. multinationals on foreign profits (Global Intangible Low-Taxed Income, or GILTI) and profits from export sales (Foreign-Derived Intangible Income, or FDII). These discounted tax rates cost the U.S. Treasury tens of billions of dollars annually, and substantially incentivize large corporations to shift profits and manufacturing facilities offshore. All together, the Joint Committee on Taxation estimates that extending these provisions represents a more than $170 billion tax break for major multinationals over the next ten years, though recent research from Penn Wharton suggests that the cost could be more than twice that.

Bizarrely, the section of the bill that permanently extends lower tax rates on certain income of major multinationals is titled “Make Rural America and Main Street Grow Again”, despite the fact that virtually no small businesses have substantial export income or foreign operations, and therefore cannot benefit from the bill’s international tax breaks. Meanwhile, international remittances by individuals will be subject to a new excise tax that is likely to hit immigrant communities hardest.

The bill goes on to undermine recent progress in stopping the global race to the bottom on corporate taxes, by threatening punitive taxes on foreign companies and individuals on the grounds that their countries are allegedly imposing “discriminatory” and “unfair” taxes on American businesses. More than 50 other countries around the world have implemented the global agreement on a 15 percent minimum corporate tax, which was initially inspired by a provision of the first Trump Administration’s 2017 tax law that introduced the world’s first minimum tax on global income. But rather than joining the rest of the world, proposed U.S. tax retaliation will put at risk foreign investment in the U.S. and resulting domestic jobs.

Domestic jobs in the clean energy sector will also be put at risk by the bill’s repeal of most of the recently enacted energy tax credits. In contrast, the bill leaves in place certain credits for carbon capture and fuel production that benefit fossil fuel companies, in addition to longstanding fossil fuel tax subsidies worth an estimated $170 billion.

“This draft bill extends trillions of dollars in wasteful and deeply unpopular tax breaks,” said Zorka Milin, FACT’s policy director. “The main winners of the bill’s corporate giveaways are Big Tech, Big Pharma, and other big multinational corporations. Polls show that nearly all Americans want the tax code to support U.S. manufacturing and jobs, rather than rewarding big companies that ship operations overseas. The draft legislation purports to justify its offshore tax breaks in the name of helping rural America and Main Street, but they won’t be easily fooled. Instead, to truly support American workers and families, Congress should close these offshore tax loopholes.”

###

Notes to the Editor:

Read the full text of the House Ways and Means Committee’s draft tax bill here.
The specific international corporate tax rates that are permanently extended by the Committee’s draft bill are the rates for Global Intangible Low-Taxed Income (GILTI), Foreign-Derived Intangible Income (FDII), and the Base Erosion and Anti-Abuse Tax (BEAT).
- The permanent extension of the deduction for GILTI is particularly egregious in the context of the White House’s focus on reshoring domestic manufacturing, as it creates an effective tax rate on the foreign income of U.S.-headquartered multinationals of less than half of the statutory corporate rate. This discount, combined with more overt offshoring incentives included in the GILTI calculation, has substantially contributed to the offshoring of U.S. pharmaceutical manufacturing and other critical industries.
- FACT has also called on Congress to repeal the FDII deduction, which provides a massive handout to a relatively small number of super-profitable corporations, predominantly in the tech sector.
The Committee’s draft bill would also allow the government to use tax law to stifle dissent and free speech by authorizing the Treasury Secretary to revoke the tax-exempt status of civil society organizations it deems to be “terrorist supporting.”
Last May, FACT released a policy platform outlining important international tax reform priorities to guide the 2025 tax debate. These priorities include equalizing the tax rates that corporations pay on foreign and domestic income, eliminating wasteful loopholes used by major multinationals to avoid taxes, and expanding funding for enforcement and technological modernization at the IRS.
Similar reforms to those proposed in FACT’s policy platform have been scored by the Joint Committee on Taxation (JCT) and independent researchers as raising substantial revenues – in excess of $1 trillion – over ten years. Specifically:
- In 2021 the JCT estimated that a suite of international tax reforms, including a 21 percent global minimum tax applied on a country-by-country basis and a full repeal of the FDII deduction as raising $1.02 trillion over ten years.
- A recent Penn-Wharton Budget Model estimate for fiscal years 2026-2035 predicts that repealing the FDII deduction and reforming GILTI would raise $1.2 trillion on a conventional basis.