Republicans say tax retaliation proposal could be cut from Trump bill if international deal can be reached
The proposal, known as Section 899, is currently part of Trump's tax-cut and spending bill, which Republicans hope to enact as early as Saturday so that the president can sign it into law before the July 4 U.S. Independence Day holiday.
House of Representatives Ways and Means Committee Chair Jason Smith told Reuters that the provision could be removed from the legislation if other countries and the European Union agree to suspend taxes such as the 'Pillar Two' global minimum corporate tax.
'If there's an agreement before the bill's passed, I'd see it to come out. But until the European Union treats U.S. businesses fairly, it will be in the bill,' Smith said in an interview.
Canadian Chamber of Commerce says Trump's revenge tax would hit investors hard even with proposed changes
White House economic adviser Kevin Hassett made similar remarks about Section 899, saying: 'Maybe it doesn't have to be in the bill if they pull those things back ahead of the vote.'
Hassett specifically cited Pillar Two and digital service taxes, which impact large U.S. technology companies like Amazon AMZN-Q and Alphabet GOOGL-Q.
'We don't like those things, and we've got a tax response, a tax retaliation, a reciprocal retaliation in the bill,' he said in an interview with the Fox Business Network.
'And so, we're in negotiations over tax issues,' Hassett added.
Section 899 would need to pass muster with the Senate parliamentarian, a non-partisan referee of budgetary rules that Republicans must satisfy to fast-track the bill and pass it without support from Democrats. To be included in the legislation, each provision must have a direct and substantial impact on the federal budget.
One lobbying source familiar with the negotiations said Section 899 could be disqualified from Trump's One Big Beautiful Bill Act as a negotiating tool that would not necessarily be implemented.
The provision would impose a progressive tax burden of up to 20 per cent on foreign investors' U.S. income, raising concerns on Wall Street about the attractiveness of U.S. investments.
What Canadian investors need to know about the Trump tax bill
Lawmakers have done little to address concerns on Wall Street, despite calls for clarifying language and leeway for the Treasury to exempt countries in negotiations with the Trump administration.
The Senate version of the provision would take effect in 2027, one year later than an earlier House version.
Senate Republican leaders are aiming to pass the Trump bill as soon as Saturday, and Hassett said the White House would expect the House to vote on full passage later in the day.
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