The Global Intangible Low-Income Tax will have local impacts. Here's how | Opinion

As we finally see the post-pandemic light at the end of the tunnel, it seems as if businesses are taking two steps forward and one step back.

Proposed federal legislation reflects that old saying, especially when looking at the outlook for businesses big and small across New York State and in the Hudson Valley.

Just as some of our most crucial industries are finally seeing relief — restaurants and bars are open again, people are heading to theaters and other attractions once shuttered, our manufacturing industries are starting to get back on track — the potential for our region to return to normal may be jeopardized by proposals being made in Washington.

The Biden Administration, while looking for ways to fund infrastructure and social reform programs — all noble and needed programs — is misguided in penalizing U.S. companies with tax proposals that put them at a global disadvantage. Current proposals from both the administration and other lawmakers would hike the Global Intangible Low Income Tax from 10.5% to 15%. It only applies to U.S companies and would not apply to foreign-based competitors selling the same product from the same country into the United States.

So why does this matter to the average New Yorker? The answers and impacts are many.

Companies who see their profit margins shrink have less money to invest in future products, services and expansions. That means fewer jobs. Less innovation. Less investment in expanding existing business. That will impact jobs across a variety of sectors, from very high-paying jobs in the tech and biotech fields to the small mom-and-pop stores where workers buy coffee, drop their dry cleaning and have a beer after work. The increase in the GILTI would affect businesses far and wide, putting our businesses at a disadvantage.

Here in the Hudson Valley, the impact could be especially hard-felt. Across a region that proudly has some of the country’s largest and oldest companies as well as emerging industries, our neighbors could be severely impacted. Since the GILTI tax was implemented, the United States is still the only country that has adopted its practice. This type of double taxation of United States companies’ foreign profits, once by the foreign county and again by the U.S., should be avoided, not increased.

U.S. multinationals have a number of legitimate business interests to place both tangible and intangible assets abroad. We need our lawmakers to see the impact — large and small, short-term and long-term — that these increased tax proposals will have on our region.

While paying one’s fair share of taxes is among the most patriotic tasks individuals and the business community can provide, we simply cannot afford to make American corporations pay more than our global competitors. I urge lawmakers in Washington to reject these proposals and find more equitable ways to fund the Administration’s priorities.

Michael Oates
Michael Oates

Michael Oates is president and CEO of the Hudson Valley Economic Development Corp.

This article originally appeared on Rockland/Westchester Journal News: Global Intangible Low-Income Tax will impact New York businesses.