Treasury Secretary Scott Bessent asked congressional leadership to remove a provision from the Republican tax legislation that would give the Treasury Department the ability to implement a so-called “revenge tax” on certain foreign investors.
The “revenge tax” provision, called Section 899, was included to stop certain foreign countries from taxing U.S. firms in a way that Republicans contend is discretionary. Bessent said his request for Section 899 to be removed came as a result of “a joint understanding among G7 countries.”
“Based on this progress and understanding, I have asked the Senate and House to remove the Section 899 protective measure from consideration in the One, Big, Beautiful Bill,” Bessent said. “This understanding with our G7 partners provides greater certainty and stability for the global economy and will enhance growth and investment in the United States and beyond.”
Section 899 first gained steam among Republicans after former President Joe Biden and his administration pushed hard for a 15% global minimum corporate tax rate.
The measure’s probable excision from the House and Senate legislation will be welcome news for financial groups from Europe, Canada, and other countries, which have ramped up lobbying against the “revenge tax.”
Republicans have been working hard to pass the One Big Beautiful Bill Act, which extends and makes several expiring tax provisions permanent while including new tax priorities championed by President Donald Trump.
The House and Senate have slightly different versions of the bill and are currently in the process of negotiating the final language that can be passed by both chambers and sent to Trump’s desk for final approval.
One area of contention is around the cost of the reconciliation legislation. The White House has argued that the bill would reduce deficits, but outside experts have largely disagreed. Notably, the “revenge tax” was a $52.2 billion revenue-raiser in the Senate version of the bill. Republicans may have to scramble to find another offset to replace savings from the provision.
WHITE HOUSE PREDICTS UP TO $2.3T IN GROWTH-INDUCED DEFICIT REDUCTION FROM TAX BILL
While the exact parameters of the deal that Bessent announced Thursday are still forthcoming, some lawmakers were already cheering the G7 tax deal. House Republican Policy Committee Chairman Kevin Hern (R-OK) praised the move in a statement.
“Thanks to President Trump and Secretary Bessent’s leadership on the world stage, we are moving in the right direction to protect American tax sovereignty and American multinationals,” Hern said. “This is an issue I’ve been working on for more than three years, meeting with OECD officials both in Paris and in DC to stress the importance of Congress’s role in any tax agreement involving our country.”
