Biden Administration's Made In America Tax Plan: Interaction With OECD Inclusive Framework

Highlights

• The Made in America Tax Plan contains corporate-related tax increases to pay for the American Jobs Plan. The headline item is the increase of the corporate tax rate from 21 percent to 28 percent. A significant portion of the other increases are related to reforming the current international tax system, by adopting a 21 percent global minimum tax on the foreign profits of U.S. corporations, incentivizing U.S. investment and jobs, and disincentivizing foreign investment/jobs and profit shifting.
• In an unusual move, the Biden Administration is intertwining its international tax policy agenda with that of the Organization for Economic Cooperation and Development (OECD). To maintain U.S. competitiveness, in view of its proposed U.S. tax increases, the U.S. is actively reengaging with the OECD's Inclusive Framework, urging other countries to adopt robust minimum taxes (Pillar 2) and, if not, to provide disincentives for their noncooperation.