In a letter to Treasury Secretary Mnuchin, Ernst calls for disclosing the true cost of the debt we owe to China, including interest paid and revenues lost due to the tax loophole
Jun 30 2020
WASHINGTON – U.S. Senator Joni Ernst (R-IA) is calling out China for taking advantage of a tax loophole that could be costing American taxpayers billions while not living up to its end of our trade agreements. She’s also urging the U.S. Treasury Department to calculate and disclose to taxpayers the true price of the United States’ debt to China and other nations, including the cost of the interest we pay and the revenues lost due to the tax loophole.
If China’s government-owned industries were treated the same as an American citizen or small business, China would be required to pay taxes on the interest earned on U.S. debt. Due to a decades old trade deal, however, China is not required to pay this tax.
In a letter to Treasury Secretary Mnuchin, Ernst writes: “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.”
The Iowa senator continues: “The Department of Treasury maintains a monthly accounting of major foreign holders of U.S. debt that serves as a great reminder of the more than $1 trillion we are in debt to the Chinese. What is not as transparent is how much China profits from our red ink, both in terms of dividends paid on the interest off of Treasury bonds and a special loophole that exempts those profits from taxation. If its 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 bonds that our government sells as a way to borrow money. Due to a 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.”
To read the letter in full, click here.