Representative Kevin Brady of Texas, the top Republican on the House Ways and Means Committee, said on Friday that he did not believe that a 15 percent global minimum tax would curb offshoring.

“If the American corporate tax rate is 28 percent, and the global tax rate is merely half of that, you can guarantee we’ll see a second wave of U.S. investment research manufacturing hit overseas, that’s not what we want,” Mr. Brady said.

At the news conference, Ms. Yellen noted that top Democrats in the House and Senate had expressed support for the tax changes that the Biden administration was trying to make.

“We will work with Congress,” she said.

Liz Alderman contributed reporting from Paris.

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What Digital Nomads Need to Know About Taxes Abroad

It’s risky. Employers need to know where their employees work in case their presence leads to corporate tax obligations abroad. The risk is higher when employees are bringing in revenue for companies, such as in sales positions, said David McKeegan, who co-founded Greenback Tax Services, an accounting firm for U.S. expatriates.

Still, many companies are operating on a “don’t ask, don’t tell” policy. A science writer in his 50s from California, who was granted anonymity because he did not want senior managers to know he had worked from Costa Rica for a few months, said his human resources department discouraged employees from working outside of California, but did not say anything explicit about working abroad. His setup from an Airbnb by the beach worked perfectly until he lost power because of a hurricane and had to work from a bar a few times. He used his company’s Zoom background, but colleagues started asking about where he was when they heard ocean waves and music. “At a restaurant,” he would tell them, without elaborating.

As more people work from abroad, it may be harder for companies to turn a blind eye. About 10.9 million Americans last year described themselves as digital nomads — people who work remotely and tend to travel from place to place — up from 7.3 million in 2019, according to MBO Partners, which provides services for self-employed workers.

“The tax system globally right now is not prepared for what the work force is going through,” Mr. McKeegan said. “I think at some point we’ll see a system where people are asked on the way in or out if they were working and countries will try and get some more tax revenue from this very mobile work force.”

Potentially. If you qualify for the Foreign Earned Income Exclusion, your first $108,700 is exempt from U.S. income tax. But keep in mind that this applies only if you’re a U.S. citizen who resides in a foreign country for more than 330 days within 12 consecutive months, not including time on planes, or if you are a bona fide resident of a foreign country. (You would still have to pay federal and state taxes on unearned income including interest, dividends and capital gains.)

It is important to track the number of days abroad to be able to prove to U.S. tax authorities that you were there.

Paige Brunton, 30, a Canadian website designer based in Hannover, Germany, learned about how complicated the tax rules are for expats the hard way: One year, she had to file tax returns in three countries. The situation was unavoidable, since she had lived and worked in Germany, Canada and the United States during that tax year, but her biggest advice for others who may have complicated situations is to get an accountant who specializes in international tax right away.

“Don’t congregate in Facebook groups and Google, it’ll really stress you out,” she said.

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U.S. Backs Global Minimum Tax of at Least 15% to Curb Profit Shifting Overseas

The Biden administration proposed a global tax on multinational corporations of at least 15 percent in the latest round of international tax negotiations, Treasury Department officials said on Thursday, as the U.S. looks to reach a deal with countries that fear hiking their rates will deter investment.

The rate was a lower-than-expected proposal from the United States, and the Treasury Department hailed its positive reception among other countries as a breakthrough in the negotiations. The fate of the talks is closely tied to the Biden administration’s plans for overhauling the corporate tax code in the United States, and the White House is pushing to reach an international agreement this summer and pass legislation later this year.

President Biden has proposed raising the corporate tax rate in the United States to 28 percent from 21 percent, which would be higher than the rate in many other countries. A deal over a global minimum tax would better allow the United States to make the increase without putting American companies at a disadvantage or encouraging them to move operations offshore.

Treasury has been holding meetings this week with a panel of negotiators from 24 countries about the so-called global minimum tax, which would apply to multinational companies regardless of where they locate their headquarters.

said in a statement after the meetings.

The negotiations over the global minimum tax are part of a broader global fight over how to tax technology companies, and they come as the Biden administration is trying to fix provisions in the tax code that it says incentivizes moving jobs overseas. The talks have dragged on for more than two years, slowed by the recalcitrance of the Trump administration and the onslaught of the pandemic.

As part of its American Jobs Plan, the Biden administration called for doubling a tax called the global intangible low-taxed income (or GILTI) to 21 percent, which would narrow the gap between what companies pay on overseas profits and what they pay on earned income in the United States. Under the plan, the tax would be calculated on a per-country basis, which would have the effect of subjecting more income earned overseas to the tax than under the current system.

If the 15 percent global minimum tax rate is adopted, it would still leave a gap between that rate and the Biden administration’s proposed U.S. domestic rate. Treasury officials have argued that the new gap would be smaller than the current one and therefore would not diminish the competitiveness of American companies. A large delta between the global minimum tax and what U.S.-based companies face on their foreign income gives companies that are based outside of the United States an advantage.

American companies have been watching the different moving parts of the negotiations closely. Big businesses have been generally wary of the Biden administration’s tax plans.

also expressed skepticism this week.

Manal Corwin, a former Treasury Department official in the Obama administration who now heads the Washington national tax practice at KPMG, said that other countries had been under the impression that the United States was set on a 21 percent global minimum tax, which would match the tax rate the Biden administration has proposed for U.S.-based companies’ foreign income. The fact that the U.S. is ready to negotiate from a lower rate is important, she said.

“To get a deal, it was important for the U.S. to clarify that they’re not necessarily saying 21 percent or nothing,” Ms. Corwin said.

Still, she added, the 15 percent “floor” could be too high for some countries to accept and too low to win approval from some members of Congress in the United States.

Rohit Kumar, leader of PwC’s Washington National Tax Services office, said that the reaction from Ireland and other countries to the proposal will be crucial because a tax agreement reached through the negotiations would be far from ironclad.

“Do countries actually change national law and enact it? Or is it just a political agreement where everyone is says, ‘That’s nice, but we’re not doing it?’” Mr. Kumar, a former top aid to Senator Mitch McConnell, the Senate minority leader, said. “As U.S. lawmakers are examining these proposals, that is the several trillion dollar question.”

Treasury officials said that they never insisted on the 21 percent rate, but that they believed that other countries were receptive to the idea of adopting a rate higher than 15 percent depending on the fate of the changes to the American tax system that are under consideration.

Ms. Yellen has warned that a global “race to the bottom” has been eating away at government revenues, and she has adopted a more collaborative approach to the negotiations than the Trump administration employed.

She is expected to continue talks about global tax reform with her international counterparts at the Group of 7 finance ministers meeting next month.

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Once Tech’s Favorite Economist, Now a Thorn in Its Side

Paul Romer was once Silicon Valley’s favorite economist. The theory that helped him win a Nobel prize — that ideas are the turbocharged fuel of the modern economy — resonated deeply in the global capital of wealth-generating ideas. In the 1990s, Wired magazine called him “an economist for the technological age.” The Wall Street Journal said the tech industry treated him “like a rock star.”

Not anymore.

Today, Mr. Romer, 65, remains a believer in science and technology as engines of progress. But he has also become a fierce critic of the tech industry’s largest companies, saying that they stifle the flow of new ideas. He has championed new state taxes on the digital ads sold by companies like Facebook and Google, an idea that Maryland adopted this year.

And he is hard on economists, including himself, for long supplying the intellectual cover for hands-off policies and court rulings that have led to what he calls the “collapse of competition” in tech and other industries.

“Economists taught, ‘It’s the market. There’s nothing we can do,’” Mr. Romer said. “That’s really just so wrong.”

free-market theory. Monopoly or oligopoly seems to be the order of the day.

The relentless rise of the digital giants, they say, requires new thinking and new rules. Some were members of the tech-friendly Obama administration. In congressional testimony and research reports, they are contributing ideas and credibility to policymakers who want to rein in the big tech companies.

Their policy recommendations vary. They include stronger enforcement, giving people more control over their data and new legislation. Many economists support the bill introduced this year by Senator Amy Klobuchar, Democrat of Minnesota, that would tighten curbs on mergers. The bill would effectively “overrule a number of faulty, pro-defendant Supreme Court cases,” Carl Shapiro, an economist at the University of California, Berkeley, and a member of the Council of Economic Advisers in the Obama administration, wrote in a recent presentation to the American Bar Association.

Some economists, notably Jason Furman, a Harvard professor, chair of the Council of Economic Advisers in the Obama administration and adviser to the British government on digital markets, recommend a new regulatory authority to enforce a code of conduct on big tech companies that would include fair access to their platforms for rivals, open technical standards and data mobility.

his Nobel lecture in 2018 prompted him to think about the “progress gap” in America. Progress, he explained, is not just a matter of economic growth, but should also be seen in measures of individual and social well-being.

Mr. Romer pushed the idea that new cities of the developing world should be a blend of government design for basics like roads and sanitation, and mostly let markets take care of the rest. During a short stint as chief economist of the World Bank, he had hoped to persuade the bank to back a new city, without success.

In the big-tech debate, Mr. Romer notes the influence of progressives like Lina Khan, an antitrust scholar at Columbia Law School and a Democratic nominee to the Federal Trade Commission, who see market power itself as a danger and look at its impact on workers, suppliers and communities.

That social welfare perspective is a wider lens that appeals to Mr. Romer and others.

“I’m totally on board with Paul on this,” said Rebecca Henderson, an economist and professor at the Harvard Business School. “We have a much broader problem than one that falls within the confines of current antitrust law.”

Mr. Romer’s specific contribution is a proposal for a progressive tax on digital ads that would apply mainly to the largest internet companies supported by advertising. Its premise is that social networks like Facebook and Google’s YouTube rely on keeping people on their sites as long as possible by targeting them with attention-grabbing ads and content — a business model that inherently amplifies disinformation, hate speech and polarizing political messages.

So that digital ad revenue, Mr. Romer insists, is fair game for taxation. He would like to see the tax nudge the companies away from targeted ads toward a subscription model. But at the least, he said, it would give governments needed tax revenue.

In February, Maryland became the first state to pass legislation that embodies Mr. Romer’s digital ad tax concept. Other states including Connecticut and Indiana are considering similar proposals. Industry groups have filed a court challenge to the Maryland law asserting it is an illegal overreach by the state.

Mr. Romer says the tax is an economic tool with a political goal.

“I really do think the much bigger issue we’re facing is the preservation of democracy,” he said. “This goes way beyond efficiency.”

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As Congress Dithers, States Step In to Set Rules for the Internet

Critics of the state regulations warned that tech companies weren’t the only ones that would have to maneuver through the patchwork of rules. “For consumers, this means confusion,” said Daniel Castro, a vice president of the Information Technology & Innovation Foundation, a think tank sponsored by tech companies.

Apple and Google declined to comment. Jodi Seth, a spokeswoman for Amazon, pointed to an April blog post from the company’s policy executive Brian Huseman, who said the state laws risked creating a hodgepodge of regulations that wouldn’t serve users well.

Will Castleberry, Facebook’s vice president of state and local public policy, said that instead, the social network largely backed more federal legislation. “While we support state efforts to address specific challenges,” he said in a statement, “there are some issues, like privacy, where it’s time for updated federal rules for the internet — and those need to come from Congress.”

To fight against the splintering rules, the tech companies have gone on the offensive. While data on state lobbying is inconsistent and often underreported, Google, Amazon and Facebook funneled a combined $5 million into those efforts in 2019, according to the National Institute on Money in Politics, a nonprofit. The companies also increased their lobbying ranks to dozens in state legislatures compared with skeletal forces five years ago.

Some of the companies have also recently sent top engineers to kill state proposals. In February, Apple’s chief privacy engineer, Erik Neuenschwander, testified in a North Dakota Senate hearing to oppose a bill that would let app developers use their own payment systems and bypass Apple’s App Store rules. The bill died a week later in a 36-to-11 vote.

Even so, states have barreled forward.

Maryland lawmakers in February overrode their governor’s veto of a new tax on sites like Facebook and Google. The tax, the first aimed at the business of behavioral advertising, takes a cut of the money that the companies make from the sale of ads shown in Maryland. One analysis projected that it would raise up to $250 million in its first year, a fraction of Facebook and Google’s combined $267 billion in annual revenue, but a real threat if replicated across states.

Trade groups for Google, Amazon and Facebook tried to stop the tax. They hired a well-connected political consultant to argue that it would hurt small businesses. When that failed, the trade groups sued to block it. The litigation is pending.

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Amazon’s $300 Million European Tax Charge Is Rejected by E.U. Court

Amazon on Wednesday won an appeal against European Union efforts to force the company to pay more taxes in the region, illustrating how American tech giants are turning to the courts to beat back tougher oversight.

The General Court of the European Union struck down a 2017 decision by European regulators that ordered Amazon to pay $300 million to Luxembourg, home of the company’s European headquarters and where regulators said the company received unfair tax treatment. The court said regulators did not sufficiently prove that Amazon had violated a law meant to prevent companies from receiving special tax benefits from European governments.

The decision, which comes as European Union and American officials attempt to reach a global tax agreement that could result in higher levies against tech companies, undercuts an effort by Margrethe Vestager, an executive vice president at the European Commission, who issued the Amazon penalty and has led efforts to force big tech firms to pay more in taxes. The companies have been criticized for using complex corporate structures to take advantage of low-tax countries like Luxembourg and Ireland. In 2020, Amazon earned 44 billion euros in Europe, but reported paying no taxes in Luxembourg.

Tech companies are using the courts to fight European regulators trying to rein in the industry’s power. Last year, Apple won an appeal against Ms. Vestager to annul a decision to repay about $14.9 billion in taxes to Ireland, where the company has a European headquarters. That case is now before the European Union’s highest court.

Apple and Amazon for violating antitrust laws.

On Wednesday, Amazon cheered the decision by the Luxembourg-based court.

“We welcome the court’s decision, which is in line with our longstanding position that we followed all applicable laws and that Amazon received no special treatment,” Conor Sweeney, a company spokesman, said in a statement.

Ms. Vestager said the European Commission would study the Amazon ruling before deciding whether to appeal.

“All companies should pay their fair share of tax,” Ms. Vestager said in a statement. “Tax advantages given only to selected multinational companies harm fair competition in the E.U.”

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Biden Defends Plans to Tax the Rich

“Ultimately, his political standing is judged by the health and well-being of the economy,” said Josh Holmes, a political adviser to Senator Mitch McConnell of Kentucky, the Republican leader. “What he’s talking about from a tax perspective is administration-assisted suicide.”

But Mr. Holmes agreed that, at least in the short term, Mr. Biden was making a winning political calculation. “He’s right that corporate tax increases are not unpopular,” Mr. Holmes said. But the political calculus for Republicans is that the policies themselves will prove unpopular with American voters by the midterm elections because of their effect on workers and the economy, he said.

Independent forecasters largely expect the economy to boom this year as the country reopens widely for economic activity on the strength of Covid-19 vaccinations. Analyses vary on how Mr. Biden’s $4 trillion agenda could affect that. Analysts at the Penn Wharton Budget Model predict the tax increases would hurt growth, on balance. Wells Fargo forecasters wrote this week that Mr. Biden’s infrastructure package, including the corporate tax increases that would fund it, would increase growth in the coming years.

The fight in Washington over Mr. Biden’s plans is a continuation of a battle that began under President Donald J. Trump, who signed a $1.5 trillion tax cut package into law in 2017. Democrats successfully portrayed the cuts as benefiting the rich, and they never reached the kind of public popularity that Republican leaders envisioned. Republicans largely abandoned plans to focus on the tax cuts during the 2018 midterm election campaigns.

“There were far more Democratic ads about it than there were Republican ads,” said Geoff Garin, a Democratic pollster.

In many ways, those tax cuts have given Mr. Biden an opportunity, Mr. Garin said.

“When Biden talks about the corporate tax rate, he frames it in the context of rolling back the 2017 corporate tax cut as opposed to an out-of-the-blue increase on corporations,” he said. “It’s clear from polling that when you provide the context of the 2017 corporate tax cut, which most voters feel was excessive and wasteful, support for the Biden proposal goes even higher.”

White House officials also cite the 2017 law in explaining their aggressive stance on the tax issue. “The pandemic laid bare huge inequalities in this country,” said Anita Dunn, a senior White House adviser. “Even before, the 2017 tax cut was very unpopular.”

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Amazon Paid No Corporate Tax to Luxembourg

Amazon had a record-breaking year in Europe in 2020, as the online giant took in revenue of 44 billion euros while people were shopping from home during the pandemic. But the company ended up paying no corporate tax to Luxembourg, where the company has its European headquarters.

The company’s European retail division reported a loss of €1.2 billion ($1.4 billion) to Luxembourg authorities, according to a recent financial filing, making it exempt from corporate taxes. The loss, which was due in part to discounts, advertising and the cost of hiring new employees, also meant the company received €56 million in tax credits that it could use to offset future tax bills when it makes a profit, according to the filing, released in March.

Amazon was in compliance with Luxembourg’s regulations, and it pays taxes to other European countries on profits it makes on its retail operations and other parts of the business, like its fulfillment centers and its cloud computing services.

But the filing is likely to provide fresh ammunition for European policymakers who have long tried to force American tech giants to pay more taxes. And the Biden administration is pushing for changes in global tax policy as part of an effort to raise taxes on large corporations, which have long used complicated maneuvers to avoid or reduce their tax obligations, including by shifting profits to lower-tax countries, like Luxembourg, Ireland, Bermuda and the Cayman Islands.

first three months of this year, the entire company’s profit soared to $8.1 billion, an increase of 220 percent from the same period last year. Amazon’s first-quarter filings, released last week, also showed that it made $108.5 billion in sales, up 44 percent, as more customers made purchases online because of the pandemic.

The company’s filing with Luxembourg was reported earlier by The Guardian.

A spokesman for Amazon, Conor Sweeney, said the company paid all taxes required in every country in which it operated.

“Corporate tax is based on profits, not revenues, and our profits have remained low given our heavy investments and the fact that retail is a highly competitive, low-margin business,” he said.

250 million in unpaid taxes from 2006 through 2014 from Amazon. Amazon and Luxembourg appealed that order, and a judgment in Europe’s second-highest court is expected next week.

Margaret Hodge, a British lawmaker, said Amazon had deliberately created financial structures to avoid tax. “It’s obscene that they feel that they can make money around the world and that they don’t have an obligation to contribute to what I call the common pot for the common good,” she said.

Matthew Gardner, a senior fellow at the Institute on Taxation and Economic Policy, a left-leaning research group in Washington, said Amazon’s Luxembourg filing showed why there was such urgency, not only in the European Union but also in the United States, to require a global minimum tax.

“This is a stark reminder of the high financial stakes of inaction,” he said.

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