Trump’s “revenge tax” may strike us on other countries

A controversial tax suggested by the administration of President Donald Trump, which may cost Canadians and Canadian companies billions that are likely to cost the US government, according to the evaluation of the non -party US Congress Office.

It is also possible that American companies will be charged by paying investors from countries that reach the tax on the transfer of investments from the United States, according to the evaluation.

It is called “Revenge Tax”, Article 899 of the beautiful draft law of Trump He calls for a new blocking tax imposing On the investment revenues paid by American companies to investors living in the two countries, the US government is not fair or discriminatory taxes.

The digital services tax in Canada, which strikes companies such as Amazon, Google, Meta, Uber and Airbnb with revenue tax from Canadian users, is among the taxes that the United States considers discrimination.

Canadian senior officials in particular admit that they are concerned about the possibility of a new Trump blocking tax and closely monitor what is happening in Washington – as well as Canadian investors, companies, investment advisers and tax lawyers.

Digital services tax in the intersection

Federal Finance Minister Francois-Philip The first large batch due on June 30.

“Deast is valid and will be applied,” he told reporters in Parliament last week.

There are two different copies of the 899 section in front of Congress currently, but both editions risk hitting Canadians and Canadian companies with a new tax of integrity.

The release adopted by the House of Representatives quickly and imposes a tax on five percent on things such as stock profits for Canadians from American companies, which adds 5 percent every year to a maximum of 20 percent.

The amendment of this section, currently shown before the Senate, will delay the tax until 2027 and top it by 15 percent. The Senate has not yet voted on the draft law, although Trump is subject to approval of the legislation by July 4, the American National A vacation.

A study on Article 899 conducted by the Joint Committee for Joint non -partisan taxes (JCT), which performs a job similar to the Canada Office for the Parliamentary Budget Officer, expects that the new tax will initially bring billions to the US Treasury Department. However, it is also expected that these revenues will begin to decrease – and by 2033 or 2034, they will actually lead to a decrease in revenue.

It is expected that the 899 section adopted by the House of Representatives will be operated with an estimated $ 116.3 billion between 2025 and 2034 for the United States Treasury, with $ 12.5 billion in 2026 to 28.7 billion US dollars in 2027 and 31.8 billion dollars in 2028.

However, analysis projects that will start revenue to decline. By 2033, the deduction tax is expected to cost the US Treasury Department of $ 4.8 billion of missing revenues, and by 2034, 8.1 billion US dollars.

The modified version of the section of the section is expected to bring only $ 52.2 billion US dollars between 2025 and 2034. But by 2034, the United States government will cost $ 2.5 billion from the United States.

A source familiar with JCT said that his analysis assumes that the gross national product of the United States will remain fixed and that foreign laws, such as DST, will not change. However, what is supposed to change is the behavior of individuals and companies to avoid deduction tax.

JCT reduces the demand for direct investment and wallet by foreign investors to reduce the value of American assets. In turn, this decrease in value will lead to a loss in the tax revenue of the US Treasury.

David McDonald, chief economist at the Canadian Center for Politics, said that JCT analysis makes a very big assumption – that countries like Canada will not back down from the United States with its revenge tax.

He said Continuous trade war It has shown that Canada is ready to respond.

In the event of a revenge of Canada, McDonald said that the United States is exposing more than Canada on the tax front because many American companies are working here.

“They are making much greater profits in Canada than Canadian companies are achieving in the profits that operate in the United States,” McDonald said.

McDonald agreed to evaluate JCT that the deduction tax can pay an immigration to invest in US stock, expecting that many companies may already get to know ways to surround their investments.

He said this is bad for business and risk destroying the economies of both countries.

“No one wins a trade war and no one wins a tax war,” McDonald said.