WASHINGTON — WASHINGTON (AP) — President Donald Trump likes to say he’s bringing in trillions of dollars in investments from foreign countries, but a provision in his tax cuts bill could cause international companies to avoid expanding into the United States.
The House-passed version of the legislation would allow the federal government to impose taxes on foreign-parented companies and investors from countries judged as charging “unfair foreign taxes” on U.S. companies.
Known as Section 899, the measure could cause companies to avoid investing in the the U.S. out of concern they could face steep taxes. The fate of the measure rests with the Senate — setting off a debate about its prospects and impact.
A new analysis by the Global Business Alliance, a trade group representing international companies such as Toyota and Nestlé, estimates that the provision would cost the U.S. 360,000 jobs and $55 billion annually over 10 years in lost gross domestic product. The analysis estimates that the tax could cut a third off the economic growth anticipated from the overall tax cuts by Congress’ Joint Committee on Taxation.
“While proponents say this punitive tax hike is intended as a retaliatory measure against foreign governments, this report confirms that the real victims are American workers in states like North Carolina, South Carolina, Indiana, Tennessee and Texas,” said Jonathan Samford, president and CEO of the Global Business Alliance.
Republican Rep. Jason Smith of Missouri, chair of the House Ways and Means Committee, has defended the provision as protecting U.S. interests by giving the president a tool that can be used against countries with tax codes that, in the federal government’s opinion, put American companies at a disadvantage.
“If these countries withdraw these taxes and decide to behave, we will have achieved our goal,” Smith said in a statement last week. “It’s just common sense. I urge