Laws targeting overseas tax dodges fail to emerge from Congress

Joe Biden promised to use tax code changes to penalize "offshoring," which is when U.S. companies set up overseas facilities to avoid paying U.S. taxes. But no such changes were ever enacted.

After taking office, Biden proposed several tax revisions that could have affected offshoring. 

One would have changed the taxation of global intangible low-taxed income, or GILTI — the income earned by foreign affiliates of U.S. companies that exceeds a 10% return on their tangible assets. Under current laws, multinational corporations can classify income in certain ways to minimize this tax.

The initial version of Biden's Build Back Better legislation, which passed the House in November 2021, would have changed how GILTI operated, increasing the effective tax rate for companies. 

But when the legislation reached the Senate, Democrats decided to reduce the bill's scope. The bill that passed both chambers, which became known as the 2022 Inflation Reduction Act, included other corporate taxation provisions, but none that directly targeted offshoring. 

Experts say there is no chance of passing legislation to accomplish this in Biden's remaining time in office, so we rate this Promise Broken.