Fall Newsletter

The passage of a short-term government funding bill, combined with the recent turmoil in the House, decrease the likelihood of anything other than must-pass legislation and full-year funding being the central issues in Washington this fall. In addition to paying close attention to these developments, GM is also concerned with two tax issues that could have an outsized impact on the company and our future success: the Organization for Economic Cooperation and Development’s (OECD) new tax rules and the extension of the U.S. R&D tax credit.

The OECD—a global intergovernmental organization of 38 countries committed to high international standards for economic policies—has enacted new tax rules that unfairly favor foreign tax practices. The new OECD Pillar Two minimum tax rules seek to impose a 15% minimum tax on the profits of large global companies. If a company’s effective tax rate in any country is below 15%, other countries can impose an additional tax on that company.

However, the OECD rules apply a different standard to how that percentage is calculated, treating refundable tax credits and cash incentives, such as those offered in other countries, differently. A justifiable effort, the OECD does not consider that tax rates at U.S. companies may fall below the 15% minimum tax rate because non-refundable incentives such as U.S. R&D and clean energy tax credits often lower a company’s effective tax rate.

This means American businesses would unfairly pay taxes to foreign countries as a consequence of their innovation, whereas the EU and other countries would not. For GM, that means the company and our vehicles could miss out on the full benefit of commercial EV tax credits in addition to paying increased taxes to foreign countries like Mexico, Canada, South Korea, and even China.

As tensions flare between the U.S. and China, and China’s global economic status continues to rise, Congress and the administration have looked to choke off what they perceive as potentially dangerous Chinese inbound and outbound investment.

With increased Congressional calls to pass anti-China policies, including potentially revoking free trade with China by withdrawing Chinese permanent normal trade relations (PNTR) status, Chinese market access for American businesses, including GM, is at risk. Simply put, American businesses would not be able to sell American goods to Chinese consumers. This would almost certainly threaten hundreds of thousands of jobs across the country and risk prompting a recession in the midst of an already vulnerable economy.

Congress should work toward improved U.S.-China relations, understanding the importance of trade to the U.S. economy. Trade not only benefits the U.S. economy and supports national security objectives, but it also offers allies an alternative to China’s economic diplomacy and coercive economic tactics. In protecting domestic industry, Congress and the administration can focus on non-tariff trade barriers, which create equally, if not more binding, restrictions on trade than tariffs.

Driving progress through partnerships.

Cheers to 75 years! If you didn’t already know, GM has been an active member of the New York Business Council—the leading business organization in NYS—for 75 years. In fact, GM recently received an award for the anniversary at the group’s annual meeting in the presence of Governor Kathy Hochul (D-NY) and several other state lawmakers.

What does this relationship represent? GM’s membership in the NY Business Council is just one example of the way we’re engaging and partnering with organizations and others across the country in our daily advocacy. These partnerships and memberships remain crucial to staying above the noise, building relationships, and effectively engaging policymakers about the issues important to the company, our employees, and other key stakeholders.