Proposed Global Tax System Could Result In One Million U.S. Jobs Lost

According to a new report from the National Association of Manufacturers (NAM) and EY’s Quantitative Economics and Statistics (QUEST) group, proposed changes to the Global Intangible Low-Taxed Income (GILTI) regime could reduce U.S. employment by up to one million jobs. The GILTI operates as a minimum tax on the foreign earnings of U.S. multinational corporations.

The Biden administration has proposed to:

• Raise the effective GILTI tax rate to 21 percent;
• Eliminate the deduction for a 10 percent rate of return on tangible assets; and
• Change the basis of the GILTI tax assessment from worldwide to country-by-country.

These proposals are similar to ones that have been offered by U.S. Senate Democrats.

According to the study, available here, the proposed changes would reduce domestic employment of globally engaged U.S. firms by between 500,000 and one million lost jobs and would cut domestic investment of globally engaged U.S. firms by up to $20 billion. As NAM said, “Manufacturers operate in a global economy, and these changes to GILTI would tilt the scales against manufacturers and manufacturing employees in the U.S.”

Instead of making the Biden administration’s proposed changes, NAM urged lawmakers to “pursue policies that level the playing field and make it easier for us to grow and expand, rather than disadvantage manufacturers and other businesses leading our recovery.”