Talking Tax International Provisions in GOP Tax Bill Face Senate Changes
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May 28, 2025 Lauren Vella, a tax policy and legislation reporter at Bloomberg Tax, dives into the implications of a recent House-passed tax bill. She discusses how it preserves current tax rates on foreign-earned income, originally shaped by the 2017 Tax Cuts and Jobs Act. Vella highlights the mixed reactions from businesses and the potential changes anticipated in the Senate, particularly regarding GILTI and other international provisions. The conversation also touches on how these tax adjustments could affect U.S. relations globally and the implications of the Byrd Rule.
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Key International Tax Provisions Explained
- The 2017 Tax Cuts and Jobs Act introduced GILTI, FDII, and BEAT to tax foreign-earned income of U.S. companies.
- These provisions are crucial for preventing profit shifting to low-tax jurisdictions and are set to increase in 2026 without congressional action.
Businesses Surprised by Slight Tax Increases
- The House tax bill largely preserves current international tax rates but includes slight increases on GILTI, FDII, and BEAT.
- Companies generally want no harm done but were surprised by these minimal tax rate increases after committee changes.
Byrd Rule Drives Tax Provision Adjustments
- The Senate's Byrd rule in budget reconciliation requires provisions to have a budgetary impact, explaining slight tax increases.
- Lawmakers treat the extensions of 2017 tax cuts as costing zero dollars, necessitating minimal adjustments to comply legally.