Dive Brief:

• The U.S. House Committee on Ways and Means Chairman Jason Smith, a Republican Congressman from Missouri, and all of the committee’s Republicans introduced a bill to “reinforce” President Donald Trump’s order Monday that effectively canceled U.S. participation in a global tax deal involving the Organization for Economic Co-operation and Development, an intergovernmental organization, according to a Wednesday release from the committee. 
• The bill, which the release referred to as the “Defending American Jobs and Investment Act” (H.R. 591), appears to provide support for the second part of Trump’s memorandum, which directed the treasury secretary to investigate whether any foreign countries are not complying with U.S. tax rules or agreements, or any that are likely to put rules in place that “disproportionately affect American companies.” 
• While the full text of the bill was not immediately available, a description of it on the Congress.gov website states it will “provide an enforcement of remedies against the extraterritorial taxes and discriminatory taxes of foreign countries; to the Committee on Ways and Means, and in addition to the Committee on Oversight and Government Reform, for a period to be subsequently determined by the Speaker.” 

Dive Insight:

The bill comes on the heels of a flurry of executive orders signed by Trump in his first days in office, including the memorandum that ordered the secretary of the treasury, working along with the U.S. trade representative, to inform the OECD that any commitments made by the Biden administration “have no force or effect in the United States absent an act by the Congress adopting the relevant provisions of the Global Tax deal.” 

The global tax deal that was rejected Monday by Trump’s memorandum was encouraged but not signed into law during President Biden’s administration, according to Alan Cole, a senior economist at the Tax Foundation, a right-leaning think tank that supports free markets. Former Treasury Secretary Janet Yellen was a key force behind talks led by the OECD that resulted in more than 130 countries agreeing to implement global tax rules, including so-called Pillar 2, which sought to set a global minimum effective tax rate of 15%. The approach was partly aimed at discouraging tax havens and keeping companies from locating headquarters in the lowest-tax nations. 

While the full bill introduced Tuesday was not available, the name is the same as previous legislation introduced in 2023, and the new one may simply be a case in which Republicans reupped old legislation that didn’t get passed, Cole said. He sees the bill as something that could be a “shot across the bow” which signals the direction that the Republican lawmakers are likely headed. Because Congress never passed legislation that brought the U.S. into alignment with the OECD tax deal, there’s no need for legislation to change the stance. 

However, the memorandum and the bill underscore a decided shift in international tax policy and one that could carry both positive and negative consequences for CFOs, Cole said. On the one hand, Trump’s memorandum and the bill are a sign that the U.S. is not going to dramatically overhaul its tax system to accommodate Pillar 2 and the global minimum tax. However, the downside is if the fight against other countries escalates, it could have repercussions for U.S. companies who do business there. 

A transatlantic trade fight “could be very bearish for CFOs of large global companies that are involved [in] transatlantic transactions of any kind,” Cole said in an interview. “If your business is exposed to that you kind of don’t want fights blowing up over small differences.” 

Spokespeople for the House Ways and Means Committee and Congressman Smith did not immediately respond to requests for comment.