President Donald TrumpHe loves to say that he brings trillion dollars from investments from foreign countries, but it is a clause in itTax discounts billInternational companies can avoid expanding in the United States.
The version that was passed in the House of Representatives will allow the federal government to impose taxes on companies and investors from countries that have been judged as “unfair foreign taxes” on American companies.
Known as Section 899, this can avoid companies avoiding investment in the United States without anxiety that may face highly slope taxes. The fate of the procedure with the Senate – which led to a discussion about its horizons and its impact.
New analysis beforeGlobal Business AllianceA commercial group representing international companies like Toyota And Nestlé, estimated that the referee will cost 360,000 jobs and $ 55 billion annually over 10 years of missing domestic product. The analysis estimates that the tax can reduce a third from the expected economic growth of the tax of the Joint Congress on taxes.
“While supporters say this punitive tax rise aims to a revenge against foreign governments, this report confirms that the real victims are American workers in states such as North Carolina, South Carolina, Indiana, Tennessee and Texas.”
Republican MP Jason Smith from Missouri, Chairman of the Roads and Means Committee in the House of Representatives, defended this ruling that it protects American interests by giving the president a tool that can be used against countries that have tax laws, in the opinion of the federal government, putting American companies in an uncomfortable position.
“If these countries withdraw these taxes and decide to act, we will achieve our goal,” Smith said in a statement last week. “It is just sound. I urge my Senate colleagues to move quickly to pass this law and protect Americans from bad economic actors around the world.”
Republicans in the House of Representatives are looking into this issue for a long time, and the draft law provides flexibility so that the president does not have to impose taxes. There were concerns between legislators in the Republican Party during the chairmanship of Joe Biden that an agreement between countries related to corporate tax blogs could cause fees on foreign companies more for American companies.
The tax gets essential tension in the Trump policy agenda: a contradiction in the extensive strokes of Trump at one time trying to impose taxes on foreign imports and profits at higher rates while searching for investments from companies based abroad.
In late May, Trump defended his approach by saying that his tariff caused more countries to invest in the United States to avoid a tax imposition on imports. While some countries and companies have issued advertisements, there is no evidence that investments that drive spending on new factories as measured in the government’s monthly report on spending on construction.
The Republican President said that his tendency to impose a severe tariff, and then fell to low interest rates.
“We have now invested 14 trillion dollars, who are committed to investing,” Trump said. “You know that we have the most important country anywhere in the world. I went to the Kingdom of Saudi Arabia, the king told me, he said, I got the hottest – we have the most important country in the world now.”
The Global Business Alliance was among the groups that signed a letter on Monday a warning of the consequences of Article 899 to the majority leader of the Senate John Thun, from South Dakota and head of the Senate Finance Committee, Mike Crabo from Idaho, both of whom are Republicans.
The Investment Institute, which represents financial companies, said that the ruling “can limit foreign investment to the United States – a major engine of growth in US capital markets that ultimately benefit American families to provide their future.”
Its analysis conducted Ey The quantitative economy and statistics note that there is a degree of uncertainty in how to implement taxes under Article 899 and other countries will respond. But fees can be imposed on companies stationed in countries where digital services taxes, as is the case in parts of Europe.
If the United States rules unfair taxes, then there will be a 30 % tax rate on foreign companies’ profits and income. Taxes can also be imposed on people working in the United States for companies that are not citizens, among other provisions. However, there is an exemption in place so that foreign debt owners from the United States are not affected by possible new taxes.
Che Cheng Huang, Executive Director of the New York University’s Tax Center, said the probability of taxes and the arbitrary nature that can be imposed by a challenge as well.
“Section 899 creates a game of political chicken with commercial partners who risk hurting companies, consumers and workers in the hope of securing American multinational companies with the ability to convert more profits from the United States into taxes on sanctuaries,” Huang said in an email. “It is a highly dangerous strategy that can expand the damage of a failed tariff war.”
There may be political repercussions if the main countries in Trump’s political alliance since 2024 have suffered from the demobilization of workers or simply find a slowdown in job growth. The Global Business Alliance finds that job losses may reach 44,200 in Florida, 27,700 in Pennsylvania, 24,500 in North Carolina and 23500 in Michigan.
This story was originally shown on Fortune.com
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