Seems as though there’s a fair amount of angst and anguish about Trump’s BBB proviso that (loosely explained) says: “If you tax us, we’re gonna tax you right back.”
In testimony before the House Ways and Means Committee, Bessent said the legislation includes new tools to retaliate against countries that impose what he called “unfair foreign taxes” on American firms — including digital services taxes and top-up levies under the OECD’s (Organization for Economic Cooperation and Development) global minimum tax framework.
“The U.S. tax system will stand next to what is called Pillar Two, and other countries are welcome to relinquish their fiscal and tax sovereignty to other nations,” Bessent said. “The United States will not. So this bill will allow us to prevent our corporate revenues from being drained into foreign treasuries—and that is in the hundreds of billions of dollars.”
At the heart of the plan is a new measure that would impose escalating surtaxes on income earned in the U.S. by companies, individuals, and even governments from nations that target American firms with extraterritorial taxes. The same countries could also face higher withholding taxes on U.S. investments and tougher rules under the Base Erosion and Anti-Abuse Tax (BEAT). Sovereign wealth funds and central banks from those countries would lose long-standing exemptions and become subject to U.S. tax on their holdings.
The provision — found in Section 899 of the bill — is designed to pressure foreign governments to roll back taxes that the administration views as discriminatory and coercive. It would start with a five-percentage-point surtax and escalate annually to a maximum of twenty points above the standard U.S. tax rate unless the targeted country reverses its policy.
And the rightness of this approach can be gauged from the level of opposition from Global Capitalist Bastards Inc.:
Multinational firms, foreign banks, and global trade associations are mounting an aggressive campaign to weaken or eliminate the provision, arguing it could lead to retaliatory measures and complicate international investment.
Yeah, my heart bleeds for all those fat corporations and insanely-wealthy fucks whose international investments will become complicated. This is aimed at the foreign governments who think that theft fleecing taxation of foreign investment is okay if they do it, but not if we do it.
I know that a lot of what Trump does is just positioning — i.e. laying the battlefield for future negotiation — but this is one initiative where I hope he digs in and goes all the way. Why should we support foreign governments’ enrichment programs at our own expense when we can’t do exactly the same to them? Make no mistake: these assholes are making billions of dollars out of this.
And lastly, anytime I see the words “OECD’s (Organization for Economic Cooperation and Development) global minimum tax framework” involved in an argument, I want to reach for my AK. No greater argument against globalization can be raised than when their principles are involved.
Feel free to bring lofty economics arguments to this post, because I will really enjoy shooting them down in flames.