On July 1, 2022, The Washington Post reported that a number of Republican lawmakers were actively working with the authoritarian regime of Hungarian Prime Minister Viktor Orbán to undermine U.S. diplomatic efforts aimed at stopping corporate tax avoidance. It is part of a pattern of the extreme right in the United States openly supporting authoritarian regimes whose interests run counter to those of America and its allies.
In this instance, however, these lawmakers went further than simply expressing support for or celebrating Orbán’s regime; they have reportedly been giving direct strategic advice to Hungary’s government on how to stymie diplomatic efforts of the United States and its allies. Those diplomatic efforts are aimed at advancing an agreement joined by more than 130 countries to ensure that large multinational corporations pay at least a minimum level of tax in the countries where they operate. In June, Hungary suddenly announced that it would oppose the European Union’s adoption of the agreement. While European leaders have pledged that the “global minimum tax will be implemented in the coming months with or without the agreement of Hungary,” Budapest’s obstruction will at least delay EU approval, which had been expected to be unanimous.
It is one thing for Republican lawmakers to oppose corporations paying a minimum tax. It is another for them to join forces with Europe’s most authoritarian regime, and Russian President Vladimir Putin’s ally, to try to block it.
It is past time to hold accountable elected American officials who blatantly reach out to partner with illiberal regimes to attempt to block or undermine widely popular policies in their own country.
In May, a month prior to these legislators’ attempts to influence U.S. policy through their embrace of Orbán, the EU, with American support, was seeking a tough oil import ban on Russia in an effort to halt its barbarous invasion of Ukraine. Hungary was vocally resisting, and MAGA extremists were celebrating the dictatorial Hungarian regime in Budapest. Notably, Orbán returned to power in 2010 with a two-thirds supermajority. Since then, his Fidesz party has redrafted Hungary’s constitution, “undermined the independent judiciary, hollowed out the media, targeted minorities, and siphoned European Union funds.”
The cooperation between the American and Hungarian right-wing includes:
Colluding to obstruct the corporate tax agreement that has long been a diplomatic priority of the United States and its allies
- In October 2021, more than 130 countries agreed to a framework “to reform international taxation rules and ensure that multinational enterprises pay a fair share of tax wherever they operate.” The framework agreement was the culmination of diplomatic efforts pursued by the United States and allies for many years, including by both the Biden and Trump administrations. It reflected that countries around the world have a shared interest in ensuring that the largest corporations cannot avoid paying at least a minimum level of tax on their profits so that countries can make the necessary investments in their people and their economies to drive economic growth. Global cooperation is necessary because corporations have proven highly adept at artificially assigning their profits to low- or no-tax jurisdictions, even when the economic activity that generated the revenue occurred elsewhere.
- Last month, the European Union was on the verge of unanimously adopting the agreement for its 27 member states. EU adoption would have been a major step forward for the global agreement. But at the last minute, Hungary raised brand-new objections and blocked the EU from moving forward.
- Given Budapest’s obstructionism, the U.S. Treasury Department moved on July 9 to terminate the United States’ existing tax treaty with Hungary.
- As the United States and allies push to advance the multilateral tax agreement, key Republicans in Congress have been actively undermining them.
- The United States was considering implementing the 15 percent overseas corporate minimum tax in the pending budget reconciliation bill when leading Republicans on two House Ways and Means subcommittees wrote to Hungary’s leadership. They explicitly supported Hungary’s opposition to EU adoption of the 15 percent corporate minimum tax—provisions that paralleled what U.S. Treasury Secretary Janet Yellen has been working with U.S. legislators to move forward. These leading House Republicans also directly criticized U.S. Treasury negotiators for pursuing the positions the EU was seeking to adopt.
- Pat Toomey (R-PA), a Senate Finance Committee leader, similarly commended Hungary’s action and stated, “It would be a profound mistake for the United States to adopt this global tax increase.”
- The Washington Post reported that some Republican lawmakers have also been working behind the scenes to provide strategic advice to Hungary as it stands in the way of the United States’ diplomatic goals. Hungary’s foreign minister said in a recent interview: “We are constantly consulting with the Republicans. There is a constant professional consultation on this issue.”
- Given Hungary’s obstruction of the OECD agreement, the U.S. Treasury Department announced on July 9 that it would terminate the U.S.-Hungary tax treaty, noting that “the benefits [of the treaty] are no longer reciprocal.” Republican committee ranking members responded by expressing support for Hungary against what they called “bully[ing]” by the United States.
Backing Budapest as it thwarts EU efforts to end Russia’s war in Ukraine
- Since early May, the European Union, working with the United States, was struggling to further embargo Russian oil imports to deny Putin an income stream that supplies his barbarous Ukraine invasion.
- On May 18, the Conservative Political Action Committee (CPAC) went forward with its premier conference in Budapest in the midst of EU struggles with Hungary over the oil sanctions. CPAC, along with President Donald Trump, has glorified Hungarian dictator Orbán, whose rule in Hungary draws inspiration from the MAGA model. At CPAC, Orbán called for the right on both sides of the Atlantic to “coordinate the movement of our troops … in the battle being fought for Western civilization.” This week, CPAC announced that it will welcome Orbán as the opening speaker at its August 4 conference in Dallas.
- Orbán has increased Hungary’s reliance on Russian energy strategically since returning to power in 2010.
- By the end of May, EU leaders agreed to the crude oil import ban, which aims to halt 90 percent of Russia’s crude imports into the 27-nation bloc by year-end. They did so only by exempting Hungary.
- On May 31, as agreement was reached without Hungary, German Chancellor Olaf Scholz said: “The sanctions have one clear goal: To prompt Russia to end this war, to withdraw its troops, and to agree a sensible and fair peace with Ukraine.”
Conclusion
Even as these Republican radicals consort, advise, and guide their Hungarian counterparts in service of subverting U.S. policies with which they disagree—such as ensuring all corporations pay their fair share and pushing Russia to end its Ukraine invasion—they shamelessly accuse their own country of “bully[ing] Hungary … and interfer[ing] in an internal European Union policy-making process.” It is past time to hold accountable elected American officials who blatantly reach out to partner with illiberal regimes to attempt to block or undermine widely popular policies in their own country.