Senior Hungarian officials say they are working with Republican lawmakers in the United States to defeat a global minimum tax backed by the Biden administration, as European and American leaders scramble to enact a ground-breaking international deal targeting multinational corporations. Peter Szijjarto, Hungary’s foreign minister, said this week that he was receiving advice from GOP officials about resisting a US-backed effort to impose an international condition on corporate taxation, though the extent of that communication was unclear. With a right-wing government under Prime Minister Viktor Orbán, Hungary is effectively delaying the implementation of the tax deal in Europe because every country in the European Union has veto power over the bloc’s tax deals. All other EU member states support the proposal. The United States has yet to implement the deal, amid a broader standoff in Congress over President Biden’s economic agenda, and some Democrats are wary of implementing the new international tax rules if the Europeans don’t do so at the same time. The global pact, a longtime goal of Treasury Secretary Janet L. Yellen, would impose a 15 percent minimum tax on large multinational corporations in an effort to halt a decades-long decline in corporate tax revenue collected by Western governments. The Biden administration said the proposal is necessary to ensure governments can fund social services and avoid a mutually damaging “race to the bottom” by nations to lower corporate tax rates to attract business. But those efforts have been strongly resisted by Republicans, who say the new rules include loopholes that will hurt the international competitiveness of American companies. Yellen is promoting a new global minimum tax The deal appears to be in jeopardy because of roadblocks in Europe and Congress. That momentum is self-sustaining: several Hungarian officials in recent days have pointed to resistance to the plan among Republican lawmakers as a reason for Hungary to hold off, and American opponents of the plan have in turn pointed to resistance to the effort in Europe. hardens an impasse that the White House has been unable to resolve. “We are constantly consulting with the Republicans. There is an ongoing professional consultation on this matter,” Szijjarto, a member of the Orban government, said in an interview posted on Facebook. Hungary has one of the lowest tax rates in Europe. “We think the lower taxes on labor and business the more it helps in terms of competitiveness.” The extent of the GOP’s cooperation with Hungarian officials was not immediately clear. GOP Reps. Adrian Smith (Neb.) and Mike Kelly (Pa.), ranking members of the House Ways and Means Committee, sent a letter to Hungary’s ambassador last week praising that country for rejecting the global tax deal. The letter was made public by Hungarian media and later confirmed by representatives of the lawmakers, who did not publish it on their congressional websites or social media pages. Spokespeople for both lawmakers said they had no contact with Hungarian officials beyond the letter. Anti-tax crusader Grover Norquist also published a letter in June praising the Hungarians, but said in an interview that he did not lobby individual Hungarian lawmakers. Sen. Patrick J. Toomey (R-Pa.) also praised Hungary’s stance, though a Toomey aide said the senator has not met with Hungarian officials. Toomey met with officials in Britain, France and Ireland to build opposition to the deal, the aide said. US conservatives have forged close ties with Orbán’s political movement in recent years, hailing Hungary as a bastion of traditional Christian values that resists immigration, gay rights and what the right decries as “woke” liberalism. Fox News host Tucker Carlson broadcast from Budapest for a week last summer, meeting Orban and praising his government. “If you care about Western civilization, democracy and families, and the savage attack on all three of those things by the leaders of our global institutions, you should know what’s happening here right now,” Carlson told viewers. . Former Vice President Mike Pence spoke at a conference on “family values” and demographics in Hungary last fall, and the Conservative Political Action Conference hosted a meeting in Hungary in May. Former President Donald Trump issued an official endorsement of Orban ahead of this year’s Hungarian elections, which Orban’s party won more easily than expected. “The Hungarian government is desperately seeking common ground with US Republicans because Hungary’s international reputation in the West has never been worse. … Another issue is to kill this global minimum tax,” Peter Kreko, director of the Hungary-based Capital Policy Research and Advisory Institute, said in an interview. “They feel the Republicans are going to come back in the midterms and then the next presidential election.” The tax proposal it consists of two elements — a review of how large multinationals, especially digital companies, are taxed and where they owe taxes; and a separate agreement on the tax floor. Details of the digital tax deal, which many experts believe requires two-thirds support from Congress to amend the US treaties, have not been proposed. European and American leaders hope to ratify the global minimum tax on time, and the Biden administration has argued it can pass that part of the deal through the budget reconciliation process that allows Democrats to pass some laws only with their narrow majority in the Senate. , bypassing any Republican filibusters. But Democrats have secured control of the Senate for a few more months before midterm elections this fall, and it is certain that Republicans would defeat the minimum tax plan if they regained control of Congress. But Europe’s inaction deepens the wariness of some US officials about overhauling the US tax code. General Electric lobbyist Lisa Wolski told a conference last month that it doesn’t make sense for the United States to raise its global tax rate before other countries adopt their own minimum taxes, according to Tax Notes. Some congressional Democrats have raised similar concerns amid negotiations over a limited economic package pushed by the Biden administration, according to two people briefed on the ongoing talks who spoke on condition of anonymity to describe private discussions. As progress in Washington has stalled, Republicans have sought to dampen the deal’s momentum in Europe as well. In their letter, Smith and Kelly acknowledge that the president retains power in foreign policy and treaty negotiations. But they also say U.S. tax law can only be changed through congressional action. “We question the wisdom of the entire world moving toward a system that forces countries to relinquish their sovereign tax authority,” the letter reads. The letter concludes: “We would like to extend an offer for direct dialogue with congressional Republicans as you consider Hungary’s position on the global tax agreement.” The comments have been widely reported by Hungarian officials trying to defeat the tax deal. Balazs Orban, political director of the Hungarian prime minister and member of the Hungarian parliament, pointed them out on Facebook in a recent post. “It’s good to see that we are not alone,” said Balazs Orban. Szijjarto, the foreign minister, also said on Facebook: “Republicans in the United States are against this law. “Just yesterday we received a letter from the Republican leaders of the House Taxation and Trade Policy subcommittees, from two Republican representatives, in which they expressed their appreciation that we do not support the global minimum tax.” A spokesperson for the Hungarian foreign minister’s office did not respond to a request for comment. Liberal — and some conservative — critics attacked the GOP for cooperating with the Hungarian government. “I’m not surprised that Republicans are going out of their way to defend big multinational corporations, even if it means working against the interests of the U.S. government to work with a foreign government,” said Frank Clemente, tax expert at Americans for Tax Fairness. , a leftist group. “Their patriotism evaporates when it comes to protecting tax loopholes for multinational corporations.” Added G. William Hoagland, senior vice president at the Bipartisan Policy Center and former Republican staff director for the Senate Budget Committee: “From the beginning, the Constitution has been very clear that politics stops at the water’s edge. When we get involved with individual lawmakers, it’s a matter of who is speaking for the United States government.” But other tax experts defended GOP officials, arguing that their efforts reflect longstanding conservative concerns about a complex and unwieldy new international tax regime. They also pointed out that lawmakers from both parties are often in touch with foreign officials about their policy priorities. “Republicans have real concerns about this, and to the extent that they’re working with other people to explain their reasoning and make the case, I don’t blame them for that,” said Daniel Bunn, an international tax expert at the Tax Foundation. , a center-right think tank that has been critical of the global tax accord. “If people have concerns about a policy and they need to talk to other people about those concerns, I think there’s room for that. There are congressional delegations all the time to talk to foreign officials about things that are going on.” Andras Petho in Budapest and Tyler Pager in Washington contributed to this report.
