Talking Tax Why Markets Fear Impact of House GOP's Proposed Retaliatory Tax
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Jun 4, 2025 In this discussion, Bloomberg Tax senior reporter Michael Rapoport brings insights into the controversial Section 899, also known as the 'revenge tax.' He explores how this proposed tax could impose harsh rates on countries the US considers unfair in their taxing practices. Concerns arise over potential job losses and diminished foreign investment in the US economy. Rapoport also highlights how this measure might tarnish the US's reputation as a business-friendly environment while stirring up debates over its diplomatic implications.
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Scope of Section 899 Retaliatory Tax
- Section 899 imposes a retaliatory tax increasing U.S. tax rates up to 20 points on individuals and companies from countries with unfair foreign taxes.
- It targets taxes like the global minimum tax, digital services taxes, diverted profits taxes, and any deemed discriminatory against U.S. companies.
Impact on Foreign Investors and Assets
- Section 899 could increase taxes on foreign individuals earning passive income in the U.S., potentially discouraging investment.
- This drop in foreign investment threatens U.S. asset values and economic stability.
Economic Risks from Reduced Foreign Operations
- Foreign companies from targeted countries could reduce or scale back U.S. operations due to retaliatory taxes.
- This risk threatens U.S. jobs and growth, as 8.4 million Americans work for international companies reinvesting billions in the U.S.