Senate OKs Blueprint bills after debate over transgender scholastic athletes
The Senate gave final approval Tuesday to its version of a bill making changes to the Blueprint for Maryland's Future, the state's 10-year, multibillion-dollar education reform plan.
The 33-13 vote sets up a conference committee with the House, which has approved its own version of the Excellence in Maryland Public Schools Act. The Senate also amended the House bill Tuesday to mirror its own version and now sends both bills to the lower chamber.
While it was largely expected, Tuesday's party-line Senate vote was delayed for almost 25 minutes while senators debated an ultimately unsuccessful attempt to add language to the House bill that would prohibit transgender females from participating in women's sports in school.
'This amendment is to simply ensure that there is a level playing field for girl's sports at the high school level by allowing only biological girls to play on a high school interscholastic or intramural varsity or junior varsity team that is designated as a girls, female, or women's team or sport,' said Sen. Justin Ready (R-Frederick and Carroll), the Senate minority whip and sponsor of the proposed amendment.
SUPPORT: YOU MAKE OUR WORK POSSIBLE
'We want to protect the crucial role that women's sports have played in development of young women,' said Ready, who said his wife participated in track and field in high school and at Salisbury University, where they met.
Sen. Ron Watson (D-Prince George's), the floor manager for the bill, said he supported the concept of Ready's amendment but that 'it's not germane to this bill.'
But Sen. Mary Beth Carozza (R-Lower Shore) supported the amendment, talking about her time as a tennis player in high school and at the Catholic University of America in Washington, D.C. She also read a letter from a volleyball player at her alma mater, Stephen Decatur High School in Berlin.
'While the other team was warming up, my teammates and I immediately noticed the strength and speed with which the biological male hit the volleyball,' Carozza read. 'It was apparent that the skills of the biological male surpassed anyone else on the court. My teammates and I were not only intimidated, but we feared for our safety.'
Sen. Mary Washington (D-Baltimore City and Baltimore County), the first openly gay African-American member of the Maryland General Assembly and still only one in the Senate, also read a letter from a high school student. But this one highlighted came from the only female player on a co-ed soccer team who said she was 'bullied, ridiculed and harassed for six years.'
'If you want girls sports to be more fair, there are other ways to do it. But it's my belief that the people who don't want transgender women in sports and pass bills … should instead focus on providing more support for women in these other spaces,' Washington read, before voting against the amendment.
'In not allowing transgender girls to participate in women's sports, we continue a long history of policing women's bodies,' Washington said.
Even Senate President Bill Ferguson (D-Baltimore City) offered a few words before he voted against the amendment.
'When I've had conversations with transgender young people who are trying to find themselves and live in a community, the pain and suffering that so many of them have felt, feeling out of place and not having a spot in this world is unbelievably painful,' he said. 'So, when I think about how we should be educating kids, it should be about what is in the best interest of children.'
The Senate voted 27-17 to reject the amendment, before voting to make the House bill conform to the Senate version.
Local school officials have long asked for more flexibility in the implementation of the Blueprint, now in its third year, and with the state facing a $3 billion budget shortfall this year, many targeted the school reform plan as an area for savings. Gov. Wes Moore (D) in January proposed a bill that deferred the start of some programs in the Blueprint and would slow the pace of some budget planned budget increases.
The House approved its version of the Blueprint reform bill earlier this month, rejecting cuts in per pupil funding and eliminating a four-year pause on the implementation of teacher collaborative time, both elements in the governor's plan. The House voted for a one-year pause in the start of collaborative time.
The Senate bill is more closely aligned with the governor's bill on the per pupil funding and collaborative time provisions.
House members are expected to reject the Senate's changes to the House bill, creating the need for a conference committee to work out compromise language between the two chambers. That agreement will need to come before Monday night, the closing day of the 2025 General Assembly session,
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Los Angeles Times
5 minutes ago
- Los Angeles Times
NATO to coordinate regular and large-scale arm deliveries to Ukraine. Most will be bought in the US
BRUSSELS — NATO has started coordinating regular deliveries of large weapons packages to Ukraine after the Netherlands said it would provide air defense equipment, ammunition and other military aid worth $578 million. Sweden also announced Tuesday it would contribute $275 million to a joint effort along with its Nordic neighbors Denmark and Norway to provide $500 million worth of air defenses, anti-tank weapons, ammunition and spare parts. Two deliveries of equipment, most of it bought in the United States, are expected this month, although the Nordic package is expected to arrive in September. The equipment is supplied based on Ukraine's priority needs on the battlefield. NATO allies then locate the weapons and ammunition and send them on. 'Packages will be prepared rapidly and issued on a regular basis,' NATO said Monday. Air defense systems are in greatest need. The United Nations has said that Russia's relentless pounding of urban areas behind the front line has killed more than 12,000 Ukrainian civilians. Russia's bigger army is also making slow but costly progress along the 1,000-kilometer (620-mile) front line. Currently, it is waging an operation to take the eastern city of Pokrovsk, a logistical hub whose fall could allow it to drive deeper into Ukraine. European allies and Canada are buying most of the equipment they plan to send from the United States, which has greater stocks of ready military materiel, as well as more effective weapons. The Trump administration is not giving any arms to Ukraine. The new deliveries will come on top of other pledges of military equipment. The Kiel Institute, which tracks support to Ukraine, estimates that as of June, European countries had provided 72 billion euros ($83 billion) worth of military aid since the start of Russia's full-scale invasion in February 2022, compared to $65 billion in U.S. aid. Dutch Defense Minister Ruben Brekelmans said that 'American air defense systems and munitions, in particular, are crucial for Ukraine to defend itself.' Announcing the deliveries Monday, he said Russia's attacks are 'pure terror, intended to break Ukraine.' President Volodymyr Zelensky expressed his gratitude to the Netherlands, posting on social media that 'Ukraine, and thus the whole of Europe, will be better protected from Russian terror.' He said the deliveries are coming 'at a time when Russia is trying to scale up its strikes. This will definitely help protect the lives of our people!' Germany said Friday it will deliver two more Patriot air defense systems to Ukraine in the coming days. It agreed to the move after securing assurances that the U.S. will prioritize the delivery of new Patriots to Germany to backfill its stocks. These weapon systems are only made in the U.S. As an organization, NATO provides only non-lethal assistance to Ukraine like uniforms, tents, medical supplies and logistics support. The 32-nation military alliance has mostly sought to protect NATO territory from possible Russian attack and avoid being dragged into a war against a nuclear power. But its support role has expanded since President Trump took office in January, even as his administration insists European allies must now take care of their own security and that of their war-ravaged neighbor. Trump has made no public promise of weapons or economic support for Ukraine. Trump said on July 28 that the U.S. is 'going to be sending now military equipment and other equipment to NATO, and they'll be doing what they want, but I guess it's for the most part working with Ukraine.' Cook writes for the Associated Press. Mike Corder in The Hague, Netherlands, and Kirsten Grieshaber and David Keyton in Berlin contributed to this report.
New York Post
5 minutes ago
- New York Post
Trump walks along White House roof, jokes he's ready to install ‘nuclear missiles' there
WASHINGTON — President Trump was spotted strolling along a roof at the White House on Tuesday morning — and jokingly told reporters he was planning to install 'nuclear missiles' there. The president at first claimed he was 'just talking a little walk' — before saying he was looking to put 'nuclear missiles' there and chuckling and moving his hand to mimic a projectile. Trump has already completed numerous construction projects at the presidential residence and said he is looking to add more, including a privately funded $200 million ballroom in the East Wing that he hopes to complete before he leaves office. 3 President Trump shouts to the press from a rooftop as he surveys the grounds of the White House on Tuesday. AFP via Getty Images The president pointed out Tuesday that he was walking on the west side of the White House, directly on top of the press briefing room — meaning that he was surveying an area not intended for the ballroom. The real-estate mogul did not respond to questions on whether he is looking to add an additional floor to the West Wing area to make additional room for his staff or reporters in the briefing room. He gestured that he may build something circular with his hands before shouting, 'Anything I do is financed by me!' He may have been also checking out the recently completed Rose Garden construction that added a concrete floor to the garden grounds — as it is directly below the West Wing roof. 3 Trump suggests he may build something 'round.' AFP via Getty Images 3 The president has already transformed the Rose Garden and plans to build a $200 million ballroom in the East Wing. AFP via Getty Images The project was initiated to make standing in the garden comfortable for women in high heels, without their stilettos getting caught in the mud. The president has previously walked around the White House grounds several times this term to talk to construction workers and survey the area of his construction projects. He erected two 100-foot flag poles — one on the North Lawn and one on the South Lawn — with American flags billowing from their masts and has transformed the Oval Office to include gold plating on the ceiling, the fireplace and the floor.
Forbes
5 minutes ago
- Forbes
Moving Forward: International Tax After The OBBBA
In this episode of Tax Notes Talk, Alan Cole of the Tax Foundation discusses the international tax provisions in the One Big Beautiful Bill Act and what may be next for negotiations on a global tax framework. Tax Notes Talk is a podcast produced by Tax Notes. This transcript has been edited for clarity. David D. Stewart: Welcome to the podcast. I'm David Stewart, editor in chief of Tax Notes Today International. This week: rethinking revenge. When the House released their initial version of the One Big Beautiful Bill Act, the international business community was concerned by the proposed section 899, which came to be known as the revenge tax. We covered this provision in a previous episode, which we'll link to in the show notes. Since then, the bill has been through a number of changes at the behest of senators and one significant change requested by the administration, concluding in the final version signed into law by President Trump. So where did Congress end up on international tax? And what does the bill mean for efforts to reach a consensus on international corporate tax? This episode is part of an ongoing series on the One Big Beautiful Bill Act. As we continue to dive deep into the most important tax changes and provisions in the coming weeks or even months, we'd like to hear from you. If there's an aspect of the bill you'd like to hear more about, please email us at podcast@ But for now, here to talk more about this is Tax Notes senior reporter Jonathan Curry. Jonathan, welcome back to the podcast. Jonathan Curry: Hello again, Dave. David D. Stewart: Now, I understand you recently talked to somebody about this. Who did you talk to? Jonathan Curry: Yeah. I talked to Alan Cole of the Tax Foundation. He's a senior economist there, and he's full of great insights. David D. Stewart: And what things did you talk about? Jonathan Curry: Well, we focused on the international tax provisions of the OBBBA, or the One Big Beautiful Bill Act. We covered quite a lot of ground, to be honest. Of course, this didn't happen in a vacuum. We went through the context, the history that led us to this point. We cover some of the major provisions in the bill, things that a lot of our listeners are, I'm sure, familiar with: the [global intangible low-taxed income, foreign-derived intangible income, and base erosion and antiabuse tax] and now the sad, new nicknames we all have to memorize in order to keep track with this evolving tax landscape that we're in. You'll hear things like the foreign tax credit haircut, the [controlled foreign corporation] look-through rule, things that might not necessarily jump off a page when you're scanning a bill. But it's stuff that's important for a lot of multinational corporations, international tax practitioners in particular, and it's going to have a lot of impact for certain industries. There are going to be some winners, some losers, and things like that. And of course, we talked about one of my favorite topics — which I'm sad it's not going to be in law anymore — the revenge tax, section 899. You'll hear Alan's views on what impact it had on the tax debate and international negotiations. And on the topic [of] international negotiations, all these international tax changes took place in the context of the pillar 2 global minimum tax framework. And you'll hear how he thinks that this moves us in some ways closer to that and some other considerations there. David D. Stewart: All right. Let's go to that interview. Jonathan Curry: Well, Alan, it's great to have you here on the Tax Notes podcast. I know you're excited to talk about your favorite topic in the world: international tax. Welcome. Alan Cole: Thank you. Absolutely great to be here. Jonathan Curry: Yeah. So we're going to dive in and start off by talking from a 30,000-foot view, the big picture here. What was the international tax landscape prior to this new "big beautiful bill" coming into effect? I mean, why were lawmakers even wanting to make changes on the international tax end in the first place? Was this a major reform? Is this [Tax Cuts and Jobs Act] 2.0? What are we looking at here? Alan Cole: Mostly, we're looking at TCJA 2.0 on the international side. This is a very similar coalition to the one that wrote the international tax reform in 2017. Same party, same president. And that means that there's a limited desire to tinker with too much. And on top of that, the coalition had a pretty narrow majority in the House of Representatives, and that also lends itself to not making too many ultra controversial changes. That said, there were reasons to tweak TCJA even from the perspective of a party that had already passed it in recent memory. Jonathan Curry: Yeah. Now, the House version of the bill, when we got the first draft of it, I remember seeing the draft document come out and thinking, "Oh, boy, here's this whole new set of stuff to write about." And I looked at it, and there wasn't very much in there on the international tax space, except for section 899, which we'll get into later. But I mean, can you imagine the world in which international tax just got ignored altogether and the system we have currently in place was just left to continue running? Or was the Senate vision of making some changes here inevitable? Like this was going to have to happen one way or another? Alan Cole: One way you could look at it would be from the House's perspective, it's hard to get unanimous approval for something among the Republican members, and you effectively need unanimous approval in order to get a majority in the House if you're relying only on Republican votes. And that lends itself to just doing what you did before because that's the baseline that everyone can at least start from. But on the other hand, international corporate income tax is not usually an area that draws a lot of political controversy where you'll see a big dispersion in what different members believe. Especially if you're doing things carefully and relatively evenhandedly, and not trying to create big winners and losers. So there was room for a little more reform. I'm not surprised that ultimately the Senate did more to change international corporate income tax provisions than the House did, because the Senate definitely felt like they had room. They had effectively a larger majority than the House majority. But ultimately the House just agreed to the Senate's changes because international corporate income tax is not that politically controversial among members in the sense that there aren't different beliefs among members. So if you're going to present a package and say, "This is the best that our writers could do given the constraints," most of the members are probably going to go, "OK." And that's kind of what happened. The House roughly accepted the Senate's changes, and that's how we ended up with a somewhat more interesting international package than the initial House bill looked like. Jonathan Curry: Well, we've been talking about changes to the international tax portion of our laws here. Let's go over some of those changes. Let's start with the big three: GILTI, FDII, BEAT. Can you just run through us real briefly just a high-level view of what the changes that were made were? Alan Cole: GILTI and FDII both have new names now. Their acronyms are now NCTI [net CFC tested income] and FDDEI [foreign-derived deduction-eligible income]. Those names actually kind of existed before. They were intermediate steps in the calculations that got you to GILTI and FDII. But the reason for the name change is that one of the final steps is no longer there, and that is the subtraction of [qualified business asset investment] from the base of both of those tax bases. And the subtraction there is effectively a subtraction of the return on tangible investments. The idea is if you start with all income and then you subtract the return on tangible investments, what you have left is your intangible income. And that's indeed where the I's in GILTI and FDII come from. Both have an I that stands for intangible, and then the other I stands for income. Now they are each down to one I, just the one that stands for income, and they no longer target intangibles. That change is a "made in America" Trump agenda type change, I think. It's one of the places where you can see a bit of a Trump ideological stamp. And overall, I'm not a fan of this for reasons we can get into, but it's one of the few places where this is really something more than just an update to TCJA. It goes in a new direction, and it takes away the original purpose of GILTI and FDII, which was to target intangible income. Jonathan Curry: And about those acronyms, they used to have these memorable acronyms: GILTI, FDII. We still have BEAT, of course. Have you settled on a way to refer to these new acronyms, the two new acronyms we have here? It's NCFCTI and FDDEI. Any good quick shorthand in your mind that you've settled on? Alan Cole: We're talking about NCTI versus NCFCTI? The C standing for CFC, which stands for controlled foreign corporation. That's the international income component of the new bill. Usually I'm hearing NCTI that can maybe be turned into "necktie" or "nicktee," but I'm not sure which one of those two will win out. And some people have gone with "fidday" for the new FDII, F-D-D-E-I. But it's always been awkward to come up with good names for these things, and certainly the long acronyms are doing themselves no favors. Jonathan Curry: Yeah. It will take a while for the dust to settle and for the tax community to settle on an agreed-upon way to refer to these, I think. Personally, I vote for "necktie." So GILTI and FDII had some pretty substantial changes. BEAT, as I understand, is fairly not that different, correct? Alan Cole: BEAT we can actually go through pretty simply. There was an idea for a whole bunch of changes to BEAT in the Senate draft, but they got rid of that set of changes and went with a much more simple rate hike to BEAT, not as big as the rate hike that it was scheduled for. It was scheduled to go from 10 [percent] to 12.5 [percent], and instead they made it go from 10 [percent] to 10.5 [percent]. So they kind of curved much of the rate increase in BEAT, and they preserved the current-policy treatment of credits and set it in law permanently. So mostly, they punted on BEAT. But there was an effort to do something more interesting, which was a high-tax exemption. And that would have actually done a lot to put BEAT a little bit more towards its intended purpose, or at least its stated purpose. It says it's a base erosion tax. That's what the B-E stands for. And base erosion would be when you're trying to get to a lower-tax jurisdiction, you're taking deductions in the U.S. by making payments out to some lower-tax jurisdiction so that your income shows up there instead. And the U.S. doesn't like that; the U.S. calls that base erosion because they would rather the income be in the U.S. and taxed as U.S. income. And that would make sense if all instances of stuff taxed under BEAT were base erosion. But in many cases, it's effectively just going after normal large countries with high corporate income tax rates because it doesn't actually make any determinations based on what kind of country a company is making payments to, or what kind of presence they have there. It just looks at categories of accounting that are deemed suspicious. So the Senate had an idea: "Well, let's actually look what kind of country it is. And if it's a high-tax country, defined as having at least 90 percent of the U.S. tax rate, then we can exempt you from BEAT, because there, you're not base eroding, you're just paying tax to another country that has a similar tax rate to ours. Presumably because you honestly believe that the royalty payments actually do belong to your enterprises in that other country." And that makes sense if you're a Japanese company and you say that a lot of your work comes from engineers based in Japan. That's a very believable claim, and that's not really a tax evasion-like claim. Same with France, for example. That's not a country that you would try to increase your income tax liability in because it's a high-income tax country. So that idea had a lot of promise, but I think the Joint Committee on Taxation scored it more expensively than perhaps writers thought it would be. I was surprised to see the number that high. I had been conditioned to think that the Joint Committee on Taxation thought that BEAT was a relatively smaller provision. And then we got this larger number, and then sure enough, it was gone in the next draft, and they did something simpler on BEAT. So I think it was just a matter of they didn't get the score they wanted and they pulled back from it. Jonathan Curry: I see. So you don't think it's a policy decision that lawmakers are like, "We don't think we should do this." It's more like, "Well, maybe on the margin, it's just not really worth making the change because it will add to our numbers, our bad math here, the deficit numbers." OK, well, that's interesting. Alan Cole: Yes. I think they were working within a current-policy revenue-neutral framework on the international side. So they were looking at 2025. What are we collecting in 2025? Let's try to design a system that collects about the same amount but is a little bit better. And if the BEAT score stopped them from reaching that goal, then that would be a reason to reverse it. Jonathan Curry: Yeah, yeah, interesting. Now there were a couple other changes in here too — CFC look-through rule, FTC haircut. Anything that surprised you? Or are these all pretty expected provisions to include in this package of proposals? Alan Cole: I think there are two categories here, and actually each of your examples comes from one of the categories. CFC look-through rule, and we could also go with the downward attribution glitch fix. There are some things that are so into the weeds that you can only really get coverage of them in a place like Tax Notes. These are really complex glitches in TCJA, or they are things that have been extended a long time, and it would be complicated if they ever went away. CFC look-through is like that. It would make the handling of U.S. multinationals much more complex without necessarily raising that much revenue. And so they made the CFC look-through rule permanent. That's a patch to the whole CFC look-through issue. And then they also included the patch to fix the problem in constructive ownership rules that was accidentally made in TCJA. It's pretty clear that there was a section of U.S. tax law that was supposed to be amended and instead it got removed, and it creates exceptions to constructive ownership rules. And that exception disappeared entirely rather than being rewritten. And as a result, people were kind of credited with having much greater CFC reach than they actually should have, and it was a whole big mess. So those are the bug fix types. And those, I think, were not big surprises. A lot of them you could see that members like Rob Portman (R-Ohio) and Thom Tillis (R-N.C.) were talking about these things for a while, and they didn't cost much. So those were definitely going to make it in there. And then the other category has to do with kind of the way that the international situation has evolved since TCJA. It's not so much that TCJA was written in a flawed way in 2017 in these cases. It's more that the way the rest of the world does things has changed, although Republicans are not always singing the same tune as the rest of the world on international corporate income tax. Here, there were a few lateral changes that can just harmonize the U.S. with foreign tax cuts a little bit more. And basically, the situation was that the U.S. had what appeared to be lower rates, but actually its rules were less generous in unique ways that were anomalous to the United States. Those are things like expense allocation, the FTC haircut, as you mentioned. Those things make it a little bit worse to be a U.S. company. But in TCJA, you had lower nominal rates than the 15 percent target that the Europeans and OECD want a lot of people to settle on. The Senate took a look at that and said, "Well, we can just remove some of these U.S. idiosyncrasies, and that gives us effectively tax cuts for corporations. And then we can raise the nominal rate, take some of that money back. That's a neutral trade, but it makes our tax code look a little bit more in line with the 15 percent target." But notably, they went only to 14 [percent], not to 15 [percent], as if almost to say, "You're not the boss of us, we will do something slightly different than your target." But effectively, the U.S. at 14 [percent] with its rules is still maybe a little bit worse, a little bit less taxpayer friendly, at least revenue-wise, than a 15 percent rate. So I don't think U.S. companies are getting away with a lot with the 14 [percent] instead of the 15 [percent]. Jonathan Curry: With this new suite of changes that we have, are there any obvious winners and losers here? I mean, you alluded to the Trump administration having a vision and putting its stamp on things. They've talked a lot about increasing domestic investment. Did these changes move the U.S. more towards that? Alan Cole: I think there are some changes that are intended to have a real impact that aren't just a little bit of lateral shuffling and creating a 14 percent rate rather than a lower 13 percent rate. There are some things that are a little bit more intended to be substantive. But even there, from an individual company's perspective, I think a lot of these things come out to be roughly a wash relative to the 2025 tax code. For example, the elimination of QBAI — the attempt to maneuver the system previously directed at intangibles towards a little bit more of a tangible and America First and export-focused tax system — that may not have that much of an impact on an overall taxpayer bottom line because, actually, the sort of company that has a lot of QBAI domestically also has a lot of it internationally. And one of those is a tax cut, and one of those is a tax hike, so they balance out for an individual taxpayer. But overall, you want to be the sort of company that has a lot of capital expenses in the U.S. or research and development in the U.S. and then maybe exports a lot. Whether using your tangibles or intangibles, that probably comes out pretty well. The big thing that I see flagged as a likely downside from large corporate practitioners is a change to [section] 163(j) interest limitations. Effectively, international income doesn't count for that, and that means that those become much tougher on some firms. Jonathan Curry: Yeah. I've certainly heard the same listening to a lot of webinars and hearing from different tax practitioners and what they're saying their eye is on and what's the big thing for their clients to look out for. [Section] 163(j), the foreign element of it definitely comes up quite a lot. So you alluded to this earlier, the current-policy baseline. Republicans did get a little mischievous with their math this time around. They used the current policy as opposed to current law, which broke with a lot of precedent. Can you tell me: How did the math add up here on the international tax provisions? Did we come out roughly revenue neutral in terms of the changes that are the higher rates, but a broader base and so forth? Where did we land in terms of the numbers? Alan Cole: Well, the tax code that was enacted in 2017 under current-law baseline rules, there, in order to make the corporate income tax side of the TCJA permanent, they had to do a fair amount of surprise tax hikes at the very, very end of the budget window. And you can count from 2017 out to 2026. That's when those tax hikes showed up. In a few cases, they had them show up a little bit earlier so as to reduce the score of the TCJA within the budget window, but there was a suite of tax hikes. In the international sphere, a lot of those tax hikes come directly in 2026, but they kind of went for current policy 2025. So what they managed to do as a result of the switch to current policy was effectively cancel out those last minute hikes on the international side and then make permanent the slightly lower, not quite revenue neutral, TCJA international side that wouldn't have passed Byrd rule muster in 2017 without those hikes. They canceled those hikes and made that permanent. So they did get some benefit if you're looking at it from the taxpayers' perspective, or they did create some revenue loss that probably would not have been possible under the current-law baseline. Jonathan Curry: To talk about one of my favorite provisions that's actually no longer in law, section 899, the retaliatory tax, the revenge tax. I certainly had a lot of fun writing about this. It makes for a great headline, and it was such an interesting piece of policy that has kept evolving throughout the process. Section 899 had two elements, correct? There is one that was going to impose these higher, progressively higher withholding rates on corporations, individuals, countries that had what we deem the discriminatory or unfair tax, undertaxed profit rules, UTPRs, and income inclusion rules. And there was also an element that was going to target digital services taxes, which later in the Senate was only going to be happening through the so-called super BEAT that was going to supercharge the base erosion and antiabuse tax. We did get a G7 deal at the end of this where they agreed that they were going to scrap their UTPRs and IRRs. They left aside, shelved for now, the question of DSTs. But in your view, how big of an impact does section 899 have on the international discussion? Do you think that was key to the U.S. getting this agreement with the G7? Or was that just a little sideline, sideshow? Alan Cole: I think [section] 899 was a very dangerous gamble, and I think it paid off. I had concerns about it while it was still in the bill. It didn't make it into the final law, and that was actually the outcome that [section] 899's architects kind of were hoping for, I think. It would have been pretty ugly if it had happened, but it was a threat they didn't want to have to go through on. So yeah, one of the biggest aspects of the OBBB international is effectively the thing that wasn't in the bill. We talked about, I'd say three categories of things that are in the bill. There's the Trump priority type stuff with the QBAI; there's the bug fixes; and there's the moving towards the 15 percent target by doing some lateral trades. But the OBBB also had [section] 899, the retaliatory provision, kind of our doomsday device, our mutually assured destruction thing. And it was supposed to target two foreign taxes, and the G7 agreed to get rid of one. And we said, "OK, good enough." And we put it down. And I think one reason that it worked well was there's broad support for combating UTPR and DST much beyond the Trump administration. One characterization you could make of the Trump administration is it starts a lot of arguments with foreign countries. And in some cases, those arguments are idiosyncratic to the Trump administration specifically. For example, arguing that Canada is not doing enough to combat fentanyl crossing the northern border of the U.S., that was not on most people's radar. That seems like a fight idiosyncratic to the Trump administration. And maybe even fighting over bilateral trade deficits, that's pretty idiosyncratic to the Trump administration. But within the U.S. business community, within the U.S. Congress, there's actually quite a lot of opposition to UTPR and to DST. The former because it usurps Congress's authority. It's a little bit like, "Oh, the Treasury went out and talked to a bunch of people over the Atlantic. Now Congress has to rewrite the U.S. tax code in a bunch of ways. Some of them kind of arbitrary, but don't seem to have much rationale." That wasn't going to fly, if only because it was a usurpation of Congress's authority. And practitioners also didn't like it because it would be a lot more work and it would turn out to not actually have much of an impact on U.S. companies' taxes. DSTs, meanwhile, are basically just tariffs in disguise. They're a way for foreign countries to effectively tariff the large number of U.S. tech companies that have done really well globally. Foreign governments have seen those as big bags of money, like pinatas that they can whack at and the money will fall out and they get a treat. And there's no support in the U.S. for letting these things stand. And so in some cases, when the Trump administration is saying something, there's a little bit of a feeling, "Well, can we wait this out? Might they get distracted?" For example, they don't seem to be talking much about buying Greenland anymore. That was a big thing for a few months, and then they just moved on. And also, there's the reality that there will be a new president and maybe that president is not going to have the same idiosyncratic Trump priorities. But I think [section] 899 being there in legislative text made a lot of people realize that not only is Congress behind the president on DSTs and UTPR, but maybe even most of the rest of the United States is as well. And so there's no way of waiting out the president and maybe making inroads with opposition or with people within his party who don't agree with all of his stuff. No, this was unanimous among Republicans, and I think probably even some Democrats really would actively want these things to go away, and few would make a big priority of arguing for them. So I think [section] 899 showed Congress's stacking order of priorities, and showed the American business community's stacking order of priorities. It even went so far as to say, "These are the specific offenses that we want [section] 899 to apply to. We're going to call out them by name, and we're also going to come up with a list of things that aren't offenses and [section] 899 can't be used for." They narrowly cabin the retaliation to be just these two things. So I think if you're a foreign government and you're not sure what to do with the more hostile or bellicose U.S. trade posture — well, the things that have broad opposition in the U.S., you probably are more likely to make a concession on those than on things that are less workable. And especially with respect to the UTPR, that's something that isn't even in effect yet. So it's easier to not do something that you haven't even started doing yet. It's easier to flake out on a plan that you haven't yet brought to completion than to stop doing things the way you were already doing them for a long time. So all of those reasons, I think, meant that the UTPR was the easiest domino to fall. I don't think that the Trump administration is going to get all of its priorities. For example, the stuff about value added taxes being an unfair barrier to trade. Well, I don't think that Europe is going to reorder its entire tax system. Value added taxes in Europe probably raise something on the order of €4 [trillion] or 5 trillion per year, if you add all of the countries together. Jonathan Curry: Sounds significant. Alan Cole: Yeah, something like that. Jonathan Curry: That's not a small chip in a poker game here. No. Alan Cole: Yeah, yeah. They're not going to just come up with something new within the next three years in order to appease one U.S. president who has idiosyncratically said that VATs are an unfair barrier to trade. Jonathan Curry: Well, Alan, so looking ahead, is there any unfinished business on the international tax front? Or do you think that this round of changes will satisfy lawmakers, policymakers for the next, I don't know, couple of years, three, five years, 10 years before they decide to give things another look? Alan Cole: The biggest unfinished business is in the area of how the U.S. international income tax system will coexist with pillar 2. The G7 deal didn't say that pillar 2 is fully going away, although that's still an outside possibility. More likely, Europe continues to implement its version of CFC rules, its effective equivalent of GILTI or now NCTI. That's all likely to still happen. The U.S. wants to be independent of pillar 2, not have pillar 2 go over and touch things that have previously been touched by the U.S. tax code. In many cases, that's relatively simple. You can think of companies that are American and companies that are German, and obviously at the very top level, you'll have one or the other of the two systems. But it starts to get more complicated when you have nested acquisitions. That's something you see in, for example, the pharmaceutical industry a lot because there are both tax and operations reasons that pharmaceutical companies have long chains of acquisitions. Often there's one type of company that does research, and then another one says, "This is good research. We're going to buy your company and figure out how to distribute the drug everywhere." Once you get those nested things, it's much, much harder to figure out exactly how the income inclusion rule, like the European international rules, would coexist or sit side by side with NCTI without colliding with it. So that's an area of unfinished business. Digital service taxes, also unfinished business. That's effectively kind of the European hidden tariff inside of corporate income tax policy. On our side, BEAT I think is actually unfair in some of the same ways that digital services taxes are. And then the big elephant in the room is all of the other trade policy stuff often done under the economic emergency rationale, which is actually being challenged in U.S. courts, and potentially just normal section 301 retaliatory tariffs too. All of those things create a chaotic international negotiation environment. But overall, the U.S. international tax system would hold up pretty well. My one question is, in the change to make it less targeted at intangible investment, does that end up having an effect on how, say, intangible-heavy firms look at the U.S. tax system? Jonathan Curry: Yeah, that'll be something to watch. All right. Well, Alan, thank you so much for taking time to chat with us today. I appreciate it. Alan Cole: Absolutely. Thank you for having me.
