- Article 899 of “One Beautiful Bill” The transition through Congress raised increasing warnings in Wall Street, after initially overwhelmed the obseure item through the estimated effect of the budget proposal on the deficit. Deutsche Bank has warned that the so -called “revenge tax” could harm the attractiveness of American assets.
As Wall Street continues to digest countless lines on the 1,000 -page budget bill, which was recently passed, one part raised a particularly sharp condition.
Article 899 of a “beautiful, beautiful draft law”, which transmits through Congress, sparked increased warnings, after initially overwhelmed the obseure item through the impact of the budget estimated on the deficit.
It was called “Revenge Tax” because it will increase the rates of individuals and companies from countries with tax policies bearing a “discriminatory” sign. This means that foreign investors, who own trillion dollars in American assets, may face higher fees for negative income such as profits and payment of benefits.
Investors have already turned towards Europe and China, as President Donald Trump’s aggressive agenda has eroded the idea of ”American exceptional”. At the same time, foreign investors offer signs Jupiter strikeAvoid American assets.
For George Saravilus, the head of FX research at Deutsche Bank, the idea of a revenge tax can make it less attractive. It is also noticeable in the aftermath of a The rule of the United States on Tuesday The nullity of Trump’s mutual definitions, as section 899 can represent alternative tools.
“We see that this legislation creates a scope of the US administration to convert a trade war into a capital war if this desires, which is a close development in the context of the court’s decision that President Trump restricts today regarding commercial policy.”
He pointed out that Article 899 uses taxes on foreign investors as a financial lever to enhance American economic priorities and only must meet a low strip before it is imposed.
It would make the deficit coverage more difficult by reducing the realistic revenue that the foreign government gains from US Treasury bonds by about 100 basis points, according to Saravilus estimates.
Although the final impact may be less than that, just entering more uncertainty and complexity about investing in American assets “undermines the attractiveness of dollar flows at a time when this is already put forward,” he warned.
He added: “It is not unreasonable for the market to conclude that if the president is restricted to the use of commercial policy, it may be to impose taxes on foreign capital a new means of leverage.”
Even the methods of the committee and the means in the House It hopes that it will never be used Instead, he behaves like more deterrent that prevents other countries from eliminating American companies.
Meanwhile, the Joint Taxes Committee, the non -party tax portfolio of Congress, chanted some Wall Street concerns.
Thomas Bartheld, Chief of Staff of the Committee, He said in a statement of Bloomberg tax This section 899 will lead to “a decrease in foreign demand for direct investment and the portfolio.”
This story was originally shown on Fortune.com
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