Sen. Joni Ernst (R-IA) wrote a letter to Treasury Secretary Steven Mnuchin on Tuesday, asking the secretary to expose how much China exploits American tax law to avoid paying taxes on American treasuries.
Ernst, one of Congress’s leading government waste hawks, wrote that while the Treasury Department maintains a “monthly accounting of major foreign holders” of American debt, the American people currently do not know how much China profits from dividends and a “special loophole” that exempts those profits from taxation.
The Iowa senator explained:
If its [China] government-owned-industries were treated the same as a U.S. citizen or small business, China would be required to pay taxes on the interest earned on the Treasury bond that our government sells as a way to borrow money. Due to do decades-old trade deal, however, China pays no tax on U.S. Treasuries, which allows it to make off with billions of dollars that would otherwise be owed to the U.S.
“The cost of this is vitally important information for U.S. taxpayers who are stuck with the bill as well as trade negotiators who might want to remind China of the billions of dollars that could be put at risk if our deals are not adhered by both sides,” she added.
Ernst added that China’s mishandling of the coronavirus outbreak led to tens of thousands of dead Americans as well as “irreparable” harm to the American economy. She wrote:
The shutdown of much of our nation’s economy was necessitated by China’s cover-up of the initial outbreak [of COVID-19] and lack of actions to contain its spread. These deliberate actions have cost the lives of more than 120,000 Americans. It has also caused economic damage, some of which is irreparable, such as the loss of family owned businesses and the addition of trillions of dollars of debt.
Ernst said that she would request the Treasury Department to begin calculating and post the amount of interest paid to the top ten foreign holders of American treasuries and the cost of “foregone tax revenues” from exemptions granted by trade deals with those top ten nations.
Ernst gave China her June 2020 “Squeal Award” for exploiting a loophole in a decades-old trade deal that could be worth billions of dollars every year.
Sean Moran is a congressional reporter for Breitbart News. Follow him on Twitter @SeanMoran3.
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