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3d ago

Senate Debates Section 899 Tax Measure That Could Drive Foreign Investors From U.S. Markets

Financial groups are urging changes after analyses projected the levy could trigger large capital withdrawals, eroding U.S. growth.

U.S. Treasury Secretary Scott Bessent testifies before a House Financial Services Committee hearing entitled "The Annual Testimony of the Secretary of the Treasury on the State of the International Financial System," on Capitol Hill in Washington, D.C., U.S., May 7, 2025. REUTERS/Nathan Howard/File Photo
President Donald Trump speaks during an "Invest in America" roundtable with business leaders at the White House, Monday, June 9, 2025, in Washington. (AP Photo/Evan Vucci)
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Treasury Secretary Scott Bessent testifies before the House Ways and Means Committee hearing on Capitol Hill in Washington, Wednesday, June 11, 2025. (Jose Luis Magana/AP)

Overview

  • Section 899 would impose escalating retaliatory taxes on foreign entities’ U.S. equity income, starting at 5% and rising to 20% over four years.
  • The Investment Company Institute warned the Senate Finance Committee that fear of the tax could prompt investors to pull billions from U.S. equities, harming both markets and the $18 trillion fund management industry.
  • A Global Business Alliance study estimates the provision could shave $55 billion off U.S. GDP annually over the next decade and cost roughly 360,000 jobs in states including Florida, Pennsylvania, North Carolina and Michigan.
  • Data from Apollo Global Management show foreign investors hold about $19 trillion in U.S. stocks, $7 trillion in government bonds and $5 trillion in corporate credit, underscoring the scope of potential outflows.
  • Lawmakers face mounting pressure to amend Section 899 as they review the One Big Beautiful Bill Act, with supporters framing it as a tool against unfair foreign taxes and critics warning of unintended economic fallout.