Arizona Businesses Pressure Sinema To Oppose Global Tax Hike

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Sen. Kyrsten Sinema (D., Ariz.) is facing pressure to oppose an international corporate tax hike local businesses say would cripple the state’s economy.

The Biden administration this month joined 130 other countries in a pledge to establish a global minimum 15 percent corporate tax rate, in an effort to eliminate tax havens worldwide. The United States can’t officially join the compact without congressional approval, which House Democrats hope to secure as part of the Biden administration’s $3.5 trillion spending bill. A group of Arizona-based companies sent a letter to Sinema asking her to oppose the tax, which they say would cost Arizona 42,000 jobs and $5.1 billion in its first year.

Sinema is a prime target for groups that oppose the global tax increase. The senator has come out against corporate tax increases and has repeatedly clashed with the White House over the scope of the spending bill. The extended negotiation effort has drawn the ire of progressive activists and Democratic Party leaders, who are exploring a potentially heated primary challenge.

A group of Arizona business leaders began lobbying Sinema in June with a letter calling on her to oppose the global corporate tax increase. The signatories, including American Express and UPS, told Sinema that approving the hike would “hurt our global competitiveness, jeopardize the jobs that we have created in the state, and undermine the benefits we bring to Arizona consumers and to the state’s economy.”

Sinema’s office did not respond to a request for comment.

Moderate Democrats are lining up in opposition to the global tax increase. This month, Reps. Tom O’Halleran (D., Ariz.), Henry Cuellar (D., Texas), and Lou Correa (D., Calif.) urged Speaker of the House Nancy Pelosi to “pause” the tax.

In a letter obtained by Politico, the congressmen warned Pelosi that the tax “would potentially reduce American competitiveness with their foreign counterparts and result in American job losses.” They also noted that the global agreement is non-binding, meaning that other countries could easily back out to gain an advantage over the United States after it implements the tax increase.

Democratic leadership can only afford to lose three votes in the House in order for the tax increase to pass.

Raising the minimum global tax rate would force large U.S. companies to pay less to their government and more to overseas governments, according to an analysis by the Tax Foundation. While the United States agreed to a minimum 15 percent rate as part of the global agreement, the House bill would actually set the global minimum tax floor at 16.5 percent. President Joe Biden praised the plan but has even called for raising that tax floor to 21 percent.

Daniel Bunn, vice president of global projects for the Tax Foundation, said Biden wants to be the global example on how to monitor large corporations.

“The Biden administration thinks that it can lead the world in pushing corporate tax rates higher and that other countries will follow,” Bunn told the Washington Free Beacon. “That is not really all that clear. The United States had the highest corporate tax rate in the world for many years and other countries were reducing their rates.”

Treasury Secretary Janet Yellen said in June that Biden’s proposal would be “largely revenue neutral” for the United States. Bunn said it’s impossible to know exactly how harmful the plan is because only the Treasury Department has the relevant data on its potential impact, which it has not published. The department must release the data, he said, as Congress considers adopting the plan.

“They have not been transparent about their analysis, and this is something they need to do,” Bunn told the Free Beacon. “This is going to put the U.S. significantly out of line with its global competitors and make the U.S. less of an attractive place to do business.”

The Treasury Department did not respond to a request for comment.