Could Trump Hit Back at Foreign Tech Taxes?
Okay, so check this out. There's this big tax bill Congress is looking at, and it has a part that could give President Trump the power to, like, hit back at countries that put special taxes on our big tech companies, think Amazon and Google's parent company, Alphabet.
Ron Estes, a Republican representative from Kansas who helped put this together, basically said, 'Hey, if other countries are gonna tax our businesses when they're over there, then their businesses over here should get taxed too.' Makes sense, right?
Loads of countries, like, 17 in Europe alone and others around the world, already have these taxes or are planning them. They're hitting things like Instagram, which is part of Meta. Germany just said it's thinking about a 10% tax on platforms like Google.
Honestly, both sides in Washington are pretty annoyed about these foreign taxes. Even the Democrats, who aren't big fans of most of this tax bill, haven't really said anything against this part about hitting back. It's in Section 899 of this super-long bill, like, 1,100 pages!
Trump's been trying to get other countries to make it easier for US businesses to sell stuff there. Under this bill, Congress would let his administration add taxes on foreign folks and companies doing business here. It's a bit tricky because the Constitution says Congress is the one who gets to decide taxes and how money is spent, not the president.
The folks who look at taxes for Congress think this part could actually bring in a lot of money, like, $116 billion over the next ten years. But some smart people are like, 'Hold on, this could backfire and make foreign companies less likely to invest in the US.'
Peter Roskam, who used to be a Republican congressman and now heads up a team at a law firm, put it strongly. He said this new Section 899 is like using a 'sledgehammer' to show that the US isn't just gonna let anyone call it a 'tax haven.'
So, the House of Representatives just barely passed this bill, and now it's going to the Senate. The Democrats are mostly against the whole bill because it pushes a bunch of Trump's main goals, like getting tougher on immigration, keeping his 2017 tax cuts, and getting rid of some green energy stuff.
Anyway, Section 899 would let the Treasury Department say these foreign tech taxes are 'unfair' and put the country on a list of 'discriminatory foreign countries.' They could look at other foreign taxes too. Once a country is on this list, the people and companies from that country doing business here could see their tax rates jump, maybe even by 20% each year!
Joseph Wang, who's a chief investment officer at Monetary Macro, thinks Section 899 could help Trump balance trade because if foreign investment goes down, the US dollar might get weaker. That could make US products cheaper for people overseas, which could boost our exports, ya know?
Stuff like portfolio interest would still be tax-free if Trump adds taxes, but some experts are still worried that taxing foreigners could scare away investment. Duncan Hardell, an advisor at NYU's Tax Law Center, said foreign investors might just, like, change how they invest to avoid these taxes, or even just invest somewhere else altogether.
This whole thing is kind of a comeback to the 15% minimum global corporate tax deal that happened when Joe Biden was president. Republicans, led by Jason Smith, the head of the House tax committee, didn't like that deal. They thought it gave Chinese companies an unfair edge.
Some foreign countries have actually used that global minimum tax idea to put higher taxes on US tech companies. They figured if our generous tax breaks for research and development pushed our companies' tax burden below that 15% mark, they could tax them more.
Trump actually told his administration to fight these foreign digital taxes back in February, but strangely they weren't even mentioned in the trade deal between the US and the UK that happened in May. The UK has a 2% tax on foreign digital services.
Honestly, idk if the Treasury Department would even use this new power if the bill becomes law, or if just the idea they *could* would be enough to make other countries change their minds. The department didn't really say what they plan to do when they were asked.
