Sioux City Times

U.S. Rep. Randy Feenstra (R-Hull) and his colleagues on the House Ways and Means Committee have raised concerns about the economic consequences of the Biden administration's recent reversal on digital trade policy decisions. Rep. Feenstra expressed his worries about the potential impacts on American businesses, jobs, and the economy as a whole, stating, "We’ve seen how foreign countries have targeted the American economy to collect additional tax revenue. The next iteration of this trend could occur following USTR’s reversal on digital trade policies that would allow foreign countries to require American businesses to either invest in those countries or lose access to those markets."

The lawmakers highlighted the potential negative effects on the U.S. economy and the loss of leadership in global digital trade rules. They also expressed concerns about the implications of the decision on U.S. tax policy, particularly regarding data localization requirements. According to the letter, these requirements could force U.S.-based companies to establish a taxable presence in foreign jurisdictions, diverting investment away from the United States. The decision could also lead to international tax implications, allowing foreign governments to claim the right to tax business revenue that would normally be taxed in the United States.

The lawmakers emphasized that the Biden administration's digital trade policy appears to conflict with the objectives outlined by the Department of the Treasury in various international negotiations and fiscal proposals. They called for a thorough analysis of the tax implications before any unilateral decisions are made. Rep. Feenstra stated, "The tax implications of this decision should have been thoroughly analyzed before the Biden administration unilaterally reversed a longstanding, bipartisan position on digital trade policy."

The full letter to Secretary of the Treasury Janet Yellen can be accessed for further details on the lawmakers' concerns.