Overview

• Section 899 would impose a progressive levy up to 20% on passive U.S. income such as dividends and royalties earned by investors in countries the U.S. deems to apply unfair taxes
• Nations likely to face the provision include European Union members, India, Brazil, Australia and the United Kingdom under the designated “discriminatory foreign country” criteria
• The Congressional Budget Office estimates that Senate approval could generate roughly $116 billion in additional tax revenue over ten years
• Analysts at Deutsche Bank and Morgan Stanley warn that higher foreign tax burdens may curb demand for U.S. Treasuries and weaken the dollar despite muted market reaction so far
• The White House views the clause as a bargaining chip to pressure other nations into dropping digital services taxes and proposed global minimum corporate levies