Bessent Calls On Congress To Scrap 'revenge Tax' From Trump Bill After G7 Strikes Deal

Treasury Secretary Scott Bessent asked House and Senate Republicans on Thursday to scrap the "revenge tax" on foreign investments from their versions of President Trump's sweeping tax bill.

In a post on the social platform X, Bessent said he asked GOP lawmakers to strike Section 899, which would have imposed a tax of up to 20 percent on investments from countries with economic policies deemed unfair to U.S. businesses, from their legislation.

Bessent said the provision was no longer necessary after the U.S. and its partners in the G7 reached a "joint understanding ... that defends American interests."

He said the deal will “[preserve] our tax base” and that “OECD Pillar 2 taxes will not apply to U.S. companies.” OECD Pillar 2 is a global minimum tax agreement that the U.S. is a party to but that has not been domestically implemented so far.

The Section 899 tax would apply to investments in the U.S. from countries deemed to be “discriminatory” against the U.S.

The retaliatory tax in the Republican tax-and-spending cut bill specifically called out Pillar 2’s “undertaxed profit rule” (UTPR) as well as digital services taxes that could apply to U.S. tech giants.

The undertaxed profits rule allows U.S. subsidiaries of multinational companies to be taxed if their parent company isn’t taxed at the base rate of 15 percent.

Digital services taxes are taxes levied by countries where digital products like big tech platforms and social networks are used. Many of those companies are headquartered in the U.S. while their products are used globally.

Despite naming the specific targets for potential retaliation, the language of Section 899 is broad. Countries and investors have been worried that it could be used as a general-purpose weapon in President Trump’s trade war against any number of economic and business practices that are disfavored by the administration.

International business groups breathed a sigh of relief at Secretary Bessent’s announcement on Thursday.

“Thank you, President Trump and Secretary Bessent, for reinforcing America’s economic competitiveness on a global stage,” Jonathan Samford, head of the Global Business Alliance (GBA), a group representing foreign investors in the U.S., said in a statement.

Tax experts have told The Hill that they’ve been surprised that the GOP bill essentially leaves the global minimum tax architecture in place by not touching the corporate alternative minimum tax (CAMT) that was delivered under the Biden administration.

“The thing that most surprised me about this legislation is that … they make absolutely no attempt to reverse or repeal the corporate alternative minimum tax that was adopted by the Democrats in 2022,” University of Michigan tax law professor Reuven Avi-Yonah said in an interview.

“It’s essentially identical to the Pillar 2 corporate global minimum tax,” he said. “The Senate also moves us closer to the Pillar 2 architecture because they increase the rates to 14 percent, which is almost 15 percent.”