Latest news with #Section899
NDTV
4 days ago
- Business
- NDTV
What's New in the Senate Version of Trump's Tax and Spending Bill
Senate Republicans plan to modify President Donald Trump's massive fiscal package to lower maximum deductions for state and local taxes and limit the impact of a "revenge" tax on foreign investors. Senate GOP leaders also plan to cut deeper into Medicaid health insurance for the poor and disabled than House Republicans did in their version of the legislation to help pay for Trump's tax cuts. Republicans on the Senate Finance Committee released their version of the legislation, which also would make permanent some business tax breaks that would only run through 2029 in the version the House passed last month by a single vote. Here are some of the key differences between the Senate and House tax bills. 'Revenge' Tax The House bill's Section 899 "revenge" tax has alarmed Wall Street analysts who warn it would create another disincentive for foreign investors already rattled by Trump's erratic trade policies and the nation's deteriorating fiscal accounts. Senate Republicans responded by delaying and watering down the levy, which would increase tax rates for individuals and companies from countries whose tax policies the government deems "discriminatory." The Senate version would postpone that new tax until 2027 for calendar-year filers and raise it by 5 percentage points a year until it hits a 15% cap. The House version of the tax would take effect sooner and rise to 20% over four years on individuals and firms from targeted countries. State and Local Tax Deduction Senate Republicans want to significantly scale back the House bill's $40,000 limit on state and local tax deductions, a move House Republicans from high-tax states such as New York, New Jersey and California are fighting. The Senate's version of the tax bill calls for a $10,000 SALT cap, which leaders acknowledge is merely a placeholder figure as they try to hash out a compromise. There are no Senate Republicans from those high-tax states, and they've made no bones about the fact that it's not a priority for them. Car Loans Senators want to restrict to new cars a House-passed provision allowing car buyers to deduct up to $10,000 a year in interest on their auto loans through 2028 for vehicles built in the US. Ohio Republican Senator Bernie Moreno, a former car dealer, pushed for the language. Moreno had also sought to make the tax break permanent, but the draft keeps it a temporary benefit. A Rivian R1S electric vehicle charges at a dealership and service center in California. Electric Vehicles The Senate bill would eliminate a popular $7,500 credit for the purchase of electric vehicles 180 days after the bill becomes law, as opposed to expiring at the end of the year for most vehicles in the House version. That could be a difference of a few days, or longer, depending on the timing of the bill. Child Tax Credit Both the House and Senate bills seek to boost the child tax credit but they do so in different ways. The Senate legislation would increase the maximum per-child credit from $2,000 to $2,200, making it permanent and adjust it for inflation in later years. The House bill would boost the tax break to $2,500, but it would decrease after 2028. A tip jar at a cafe in Brooklyn. Tipped Workers The Senate bill contains new limits on Trump's campaign promises to exempt tips and overtime from taxation. It caps the amount of tipped wages that can be exempt at $25,000 per individual and overtime at $12,500 per individual and $25,000 per couple. The breaks phase out above $150,000 in income for individuals and $300,000 for couples, and, like the House bill, they expire after 2028. Seniors The Senate bill expands a maximum $4,000 bonus standard deduction for seniors to $6,000 in an effort to better offset all Social Security taxes paid, a promise by Trump. Medicaid Cuts The Senate bill makes more aggressive cuts to the Medicaid program for low-income and disabled people than the reductions in the House bill, favoring states like Texas and Florida that did not expand Medicaid under the Affordable Care Act. The Senate bill also would require parents with children 15 and older to work or do community service for 80 hours per month to qualify for health insurance through Medicaid. The House plan exempted all people with dependents from the work requirements. An entrance to Harvard Yard on the Harvard University campus. University Endowment Tax The Senate bill significantly pares back the House's plans to increase taxes on investment income generated by private university endowments. While the House proposed a levy as high as 21% on institutions with the largest endowments, the Senate version would cap the tax hike at 8%. The bill does not include a tax on private foundations found in the House bill. Permanent Business Tax Breaks The panel also plans to permanently extend three business-friendly tax breaks that end after 2029 in the House version. Those provisions include the research and development deduction, the ability to use depreciation and amortization as the basis for interest expensing and 100% bonus depreciation of certain property, including most machinery and factories. Gun Tax Breaks The Senate version would eliminate taxes and other regulations on many guns and silencers subject to the National Firearms Act of 1934 in a win for gun-rights advocates.
Politico
5 days ago
- Business
- Politico
Congress gets into the global tech tax battle
With help from Aaron Mak There's been a high-stakes global tax fight over tech for a decade, with billions of dollars at stake for leading U.S. companies. The fight is over digital services taxes — fees charged on search engines, online marketplaces and social media services — which more than 30 countries around the world have imposed or approved since 2016. Now, Congress is pushing a very Trumpian way to fight back: a revenge tax. The proposal for the tax, included in the reconciliation bill moving on Capitol Hill, is upsetting U.S. allies, foreign companies and American business lobbyists. And although U.S. tech companies would benefit from the measure, it's not clear that the industry even wants this solution. The argument is raising questions over what's possible — and wise — when it comes to the U.S. fighting overseas tech regulation. American tech companies hate digital services taxes, and have openly asked for help in fighting them. Six industry groups, including the Computer and Communications Industry Association, the Consumer Technology Association and the Information and Technology Industry Council, wrote on June 3 to Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and U.S. Trade Representative Jamieson Greer. The groups called for 'decisive action' on 'discriminatory' digital services taxes. In particular, the letter pointed to Canada's newly imposed DST that applies a 3 percent levy on revenues from some digital services, and the U.K.'s tax, which imposes a 2 percent levy on similar revenues, saying the two together 'represent the largest burden on U.S. firms and the U.S. Treasury, costing billions of dollars in lost revenue.' President Donald Trump vowed to respond to digital services taxes with tariffs and other tools in a February memo, writing: 'American businesses will no longer prop up failed foreign economies through extortive fines and taxes.' Trump also called for a possible renewal of unfair trade probes from his first term into countries that impose DSTs, including France, Austria, Italy, Spain, Turkey and the United Kingdom. As that happens, Congress has entered the fray with a remedy. Deep inside the 1,000-plus-page megabill passed by the House lies the 'revenge tax,' also known as Section 899 — a provision that would target countries with tax policies the U.S. says are unfair to Americans. Those include the digital services tax that applies to online business, as well as another mechanism known as the undertaxed profits rule, which some countries could use to tax U.S.-based businesses under a global tax treaty signed by more than 140 countries. The measure will allow the U.S. to impose higher taxes — up to 20 percentage points phased in over four years — on foreign companies, investors and individuals from countries that impose those 'unfair taxes' on American business interests. Bessent recently told Congress, '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.' This revenge tax has scared foreign business leaders, especially from Canada, which is set to collect its first digital services tax payment on June 30. Gaphel Kongtsa, director of international policy for the Canadian Chamber of Commerce, said he and some 30 business leaders spent last week lobbying the Senate against the 'revenge tax.' Kongtsa said his message to Congress is twofold: First, Canada's DST is unpopular and a new government there may roll it back. And second, the U.S. tax measure could deter Canadian investment and further destabilize trade relationships at a time when American and Canadian leaders are working on a trade deal that could include lifting the digital levy. 'We feel like there's ways to resolve this problem without Section 899,' he said, adding, 'what we don't want is to shift what is now a trade war into a capital war.' Other global industry groups are weighing in as well. The Global Business Alliance, representing 200 major international companies including Taiwanese chip giant TSMC and Dutch ASML, met with some 60 offices in Congress last week, according to its president Jonathan Samford. The group put out a report last week finding Section 899 could eliminate up to 700,000 U.S. jobs. A tax expert from Japan, granted anonymity to speak freely, said leading companies from his country also hit the Hill last week to press against the revenge tax. The overseas tax issue certainly has the American tech industry's attention — but conversations with the groups that signed the June 3 letter show they have mixed feelings on retaliating against DSTs via Congress. The CTA has not commented on Section 899. Nor has the CCIA, although it said it is urging American trade officials 'to negotiate a resolution to this trade dispute before the end of the month.' The ITI has yet to weigh in on the megabill measure either; its most recent statement once again asked the White House to act against Canada's DST 'and ultimately secure its withdrawal.' The long-term projected effects of Section 899 are mixed. An estimate of the bill's effect by the nonpartisan Joint Committee on Taxation found it would at first raise tax revenue in the U.S., but would likely lead to lower tax revenues within eight years because it would drive foreign investors away. Adam Michel, a tax expert at the libertarian Cato Institute, said he could see a world where the 'revenge' portion of Section 899 scares countries into removing their digital services taxes. 'But if it doesn't have the intended effect of changing foreign tax policy,' he said, 'then you're left with both the original bad taxes and a new very destructive tax on top of it.' The Wall Street Journal pushed back against what it called 'a freakout' over Section 899. It said in an editorial the retaliatory tax is not a 'blunt-force protectionist tool', and that it leaves time for other countries to negotiate their taxes down. What's next? Kongtsa, from Canada's Chamber of Commerce, thinks Ottawa should make a strategic concession on the DST: He says he hopes Canada will drop the tax as part of negotiations with the U.S. and Mexico to review the USMCA agreement hammered out in Trump's first administration. For the House Ways and Means Committee that passed Section 899 in the first place, perhaps that was the whole point, according to a recent statement from its chair, Rep. Jason Smith (R-Mo.). 'If these countries withdraw these taxes and decide to behave, we will have achieved our goal,' he said. Tech execs get even closer to the Pentagon Just how close is the Trump administration to Palantir? Apparently, when a group of new tech executives joined the Army Reserve, it was Palantir's idea. On Friday, Army Chief of Staff Gen. Randy George swore four tech executives into the U.S. Army Reserve: Palantir CTO Shyam Sankar, Meta CTO Andrew 'Boz' Bosworth, OpenAI Chief Product Officer Kevin Weil and Thinking Machines adviser Bob McGrew. POLITICO's Christine Mui spoke to George's communications adviser, Col. Dave Butler, over the weekend for the California Decoded newsletter, and he told her the idea came from Sankar. 'Shyam, in his overwhelming patriotism came to us, and said 'I want to join the Army. I want to wear the cloth of the nation. Just doing what I can do to help from Palantir isn't enough,'' Butler said. 'Then he said, 'I've recruited three other guys to come with me.'' Sankar and his associates will serve as lieutenant colonels, but won't be required to resign their corporate jobs. They will advise the military on issues like recruiting high-skilled workers and integrating commercial technology. The appointments are part of a new military initiative known as Detachment 201, which seeks to retain tech executives for guidance. Sankar's role in driving the appointments is notable given Palantir's increasing involvement with the administration. Co-founder Peter Thiel was one of Trump's earliest backers from the tech industry. Trump tapped the company to help implement his March executive order to augment data sharing across agencies, potentially providing it extensive access to Americans' personal information. Microsoft fortifies European 'cloud sovereignty' The European Union just got a little closer to keeping control over its troves of data. Microsoft announced new features on Monday enabling European cloud clients to better supervise their data, as Mathieu Pollet reports for POLITICO EU. The upgrades include a new system called Data Guardian, which ensures that only Microsoft employees residing in Europe can remotely access cloud systems in the area, building on the company's previous 'sovereign cloud' initiatives. This raft of new cloud features comes as the EU works toward 'technological sovereignty,' a term that European Commission President Ursula von der Leyen began using in 2019 for her strategy to turbocharge the union's innovation and help it compete with the dominant American and Chinese tech players. The EU appointed Finland's Henna Virkkunen as its inaugural tech sovereignty commissioner in December. Von der Leyen's vision has gained momentum over the past year, especially as the Trump administration gets pushy on international trade. Yet practical obstacles still stand in the way given the extent to which the EU currently depends on foreign tech. Notably, the data in the new system is still being managed by Microsoft, an American company. The European Commission released an International Digital Strategy in early June emphasizing the need to strengthen transnational partnerships, especially given 'the superior ability of the US to innovate, scale-up globally and succeed in the tech sector.' post of the day THE FUTURE IN 5 LINKS Stay in touch with the whole team: Aaron Mak (amak@ Mohar Chatterjee (mchatterjee@ Steve Heuser (sheuser@ Nate Robson (nrobson@ and Daniella Cheslow (dcheslow@
Mint
5 days ago
- Business
- Mint
Senate to Unveil Trump Tax Bill Draft With SALT Fight Unresolved
Senate Republicans plan to unveil key details of their version of President Donald Trump's giant economic policy bill as soon as Monday, with the party pushing to enact the $3 trillion tax package by July 4. Republican lawmakers are slated to return to the US Capitol to receive a briefing on the legislation Monday afternoon. The bill text, which could be released later that day, will represent a major breakthrough for the GOP as it seeks to continue to advance the centerpiece of Trump's economic agenda. Finance Committee Chairman Mike Crapo has toiled for weeks to forge a compromise between four factions in his party: conservatives who want deeper spending cuts, moderates seeking to soften those reductions, business allies pushing for larger tax cuts and members who support preserving the clean energy tax breaks that were phased out in the House bill. One major outstanding question may be left blank in the Senate's first version of the bill. Lawmakers have said the draft on Monday won't resolve how the legislation will ultimately treat the state and local tax deduction. The SALT section will either be left blank or set the cap at the current level — $10,000 — as a starting point for further negotiations. Senate Majority Leader John Thune said on Fox News Sunday said there is no real interest among Republicans who hail from low tax states to raise the SALT cap to the $40,000 level called for in the House-passed version. 'I think at the end of the day we'll find a landing spot. Hopefully that will get the votes we need in the House, a compromise position on the SALT issue,' Thune said. House Republicans representing high-tax areas in New York, New Jersey and California have said they would not accept anything less than the $40,000 cap. They've said they're prepared to block the bill when it comes back to the House for a final vote if there is a less generous allowance for SALT. House Speaker Mike Johnson has also been putting pressure on Senate leaders to preserve the $40,000 cap in order for the bill to maintain the support it needs in his chamber. Energy companies will be closely watching how the draft addresses the phase-out timelines for clean-energy tax credits, particularly for projects that are already under way. Wall Street will also be looking for changes to the Section 899 'revenge tax,' which has sparked concerns among foreign investors. Senators have said they are looking to soften the blow of that levy. Senate Republicans have for months pushed for making permanent a trio of expired and expiring business-tax provisions from Trump's first-term tax cuts. Those tax breaks — which will costs hundreds of billions of dollars — include: Trump, in meetings with Republicans, has argued in favor of keeping the business breaks temporary, putting him at odds with some members of his party, according to people familiar with the conversations. The president believes making them last just through 2029 boosts near-term economic growth, the people said. The president is open to and would prefer the business tax provisions to be shorter in length to make sure they spark investment in the short-term, but the administration is also open to Republican lawmakers making them permanent because it knows that is a high priority for senators, said one White House official. Senator Ron Johnson, a Wisconsin Republican, said earlier this month that Trump called for keeping the business credits temporary, and 'made a pretty good case' that a shorter window could spur investment early on. It also means they would cost less. The Medicaid portion of the bill will also likely undergo more negotiations before a final vote, with many lawmakers skeptical of the House's calls to quickly ramp up requirements that could scale back the ability of low-income people to qualify for health coverage. Some lawmakers have argued that states won't be ready to implement proposed work requirements for Medicaid by the end of 2026 and have raised concerns about mandating parents of young children to work. Others have objected to moves to crack down on the ability of states to tax Medicaid providers. The more that these House provisions are watered down, however, the more Senate Republicans will need to look to other programs like Medicare Advantage billing practices to keep the cost of the bill from expanding. 'Just because they put it out there doesn't mean it's final,' Senator Josh Hawley of Missouri said about the initial version of the bill. Even as Republicans aim to build a political consensus around tax and spending-cut details, they are also wrangling with Senate rules. The time-consuming process of ensuring the tax bill does not contain extraneous non-fiscal matters is also slowing down Republicans' ability to act quickly on the measure. Democrats are challenging dozens of provisions in front of the Senate rules-keeper in the hopes of having them stricken from the bill. Among the provisions under dispute are the regulation of gun silencers, new restrictions on the ability of courts to hold Trump administration officials in contempt and penalties for states that regulate artificial intelligence. Republicans can only lose three votes on the partisan bill. With assistance from Derek Wallbank. This article was generated from an automated news agency feed without modifications to text.
Yahoo
13-06-2025
- Business
- Yahoo
British investors face £5bn blow from Trump's ‘big, beautiful bill'
British investors are facing a $7bn (£5bn) tax blow from Donald Trump's 'big, beautiful bill', analysts have warned. The UK Government alone could have to pay $400m a year as part of the 'revenge' tax outlined in the Republican tax and spending bill that has recently been passed by the House of Representatives. Mr Trump's bill is set to charge a retaliatory tax on some foreign investments made by entities from countries that the US deems to have 'unfair' tax systems – which includes the UK. The tax, known as Section 899, would levy a 5pc rate on gains made by UK investors – a rate that will increase by five percentage points each year up to a maximum rate of 20pc. Crucially, analysts have warned the wording of the policy documents open the door to taxing interest earned on holdings of US Treasuries, which are usually tax-exempt. The UK will be hit particularly hard if America starts charging a new tax on yields from US Treasuries because of its vast ownership of this debt. Britain recently overtook China as the world's second largest holder of US Treasuries, behind only Japan. UK entities, such as pension funds and private investors, hold a total of $779bn in US government bonds. The UK receives about $35bn a year in earnings, assuming an average interest rate of 4.5pc, according to analysis by the National Institute of Economic and Social Research (Niesr). If these yields are taxed at 5pc, this will cost $1.8bn – rising to $7.2bn as the tax rate increases to 20pc in the fourth year. Duncan Hardell, international tax specialist at NYU's Tax Law Centre, said that although it was unclear whether exemptions on Treasuries would still apply, there is a risk the tax rate will go up. 'The statute itself is not clear on this point,' he said. Section 899 has triggered widespread fear across Wall Street and prompted a huge lobbying drive, with dozens of international executives travelling to Washington DC to meet with members of Congress earlier this month to discuss the measure. The UK Government alone holds $55bn in US Treasuries. Niesr estimates yields on these holdings would be liable for a $100m tax charge in the first year, rising to $400m in the fourth year. Stephen Millard, Niesr's deputy director, warned that if this measure was imposed it would likely trigger a fire sale. He said: 'The big thing, of course, is how people would respond if it becomes clear that this income was taxable. You might expect to see holders of US Treasuries try to get out of them as much as they possibly can.' This would mean market turmoil, as a sell-off would drive down the value of the bonds dramatically. In turn, this would trigger a surge in US government borrowing costs as investors demanded higher returns to cover their costs. 'That whole idea of the US as being a safe currency or US Treasuries as being safe assets suddenly changes,' Mr Millard said. Even if Section 899 does not apply to holdings of US Treasuries, economists have warned the measure risks turning the president's trade war into a capital war and would trigger enormous market disruption. Mr Hardell added: 'It could cause chaos. The risk is you're creating a new front in the ongoing tariff war and extending that to taxes and investment. 'There's a real possibility that the US will be fighting the rest of the world all at once, on multiple fronts. Investment, business and talent could just flee to other countries.' Kim Clausing, a tax academic at the UCLA School of Law, said: 'What we're going to do is tax foreign investors at an accelerating rate based on things beyond their control, and we're going to be doing that in a context where we're issuing a lot of debt, erecting trade barriers and eroding a lot of sources of US strength. 'I find it deeply disturbing. It's a big overreach, and it's one that will backfire. We're basically going to shoot ourselves in the foot by making the US a much less attractive place to invest.' The bill is being scrutinised by the Senate and Mr Trump has set a deadline of July 4 to get a finalised version. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more. Sign in to access your portfolio
Yahoo
13-06-2025
- Business
- Yahoo
British investors face £5bn blow from Trump's ‘big, beautiful bill'
British investors are facing a $7bn (£5bn) tax blow from Donald Trump's 'big, beautiful bill', analysts have warned. The UK Government alone could have to pay $400m a year as part of the 'revenge' tax outlined in the Republican tax and spending bill that has recently been passed by the House of Representatives. Mr Trump's bill is set to charge a retaliatory tax on some foreign investments made by entities from countries that the US deems to have 'unfair' tax systems – which includes the UK. The tax, known as Section 899, would levy a 5pc rate on gains made by UK investors – a rate that will increase by five percentage points each year up to a maximum rate of 20pc. Crucially, analysts have warned the wording of the policy documents open the door to taxing interest earned on holdings of US Treasuries, which are usually tax-exempt. The UK will be hit particularly hard if America starts charging a new tax on yields from US Treasuries because of its vast ownership of this debt. Britain recently overtook China as the world's second largest holder of US Treasuries, behind only Japan. UK entities, such as pension funds and private investors, hold a total of $779bn in US government bonds. The UK receives about $35bn a year in earnings, assuming an average interest rate of 4.5pc, according to analysis by the National Institute of Economic and Social Research (Niesr). If these yields are taxed at 5pc, this will cost $1.8bn – rising to $7.2bn as the tax rate increases to 20pc in the fourth year. Duncan Hardell, international tax specialist at NYU's Tax Law Centre, said that although it was unclear whether exemptions on Treasuries would still apply, there is a risk the tax rate will go up. 'The statute itself is not clear on this point,' he said. Section 899 has triggered widespread fear across Wall Street and prompted a huge lobbying drive, with dozens of international executives travelling to Washington DC to meet with members of Congress earlier this month to discuss the measure. The UK Government alone holds $55bn in US Treasuries. Niesr estimates yields on these holdings would be liable for a $100m tax charge in the first year, rising to $400m in the fourth year. Stephen Millard, Niesr's deputy director, warned that if this measure was imposed it would likely trigger a fire sale. He said: 'The big thing, of course, is how people would respond if it becomes clear that this income was taxable. You might expect to see holders of US Treasuries try to get out of them as much as they possibly can.' This would mean market turmoil, as a sell-off would drive down the value of the bonds dramatically. In turn, this would trigger a surge in US government borrowing costs as investors demanded higher returns to cover their costs. 'That whole idea of the US as being a safe currency or US Treasuries as being safe assets suddenly changes,' Mr Millard said. Even if Section 899 does not apply to holdings of US Treasuries, economists have warned the measure risks turning the president's trade war into a capital war and would trigger enormous market disruption. Mr Hardell added: 'It could cause chaos. The risk is you're creating a new front in the ongoing tariff war and extending that to taxes and investment. 'There's a real possibility that the US will be fighting the rest of the world all at once, on multiple fronts. Investment, business and talent could just flee to other countries.' Kim Clausing, a tax academic at the UCLA School of Law, said: 'What we're going to do is tax foreign investors at an accelerating rate based on things beyond their control, and we're going to be doing that in a context where we're issuing a lot of debt, erecting trade barriers and eroding a lot of sources of US strength. 'I find it deeply disturbing. It's a big overreach, and it's one that will backfire. We're basically going to shoot ourselves in the foot by making the US a much less attractive place to invest.' The bill is being scrutinised by the Senate and Mr Trump has set a deadline of July 4 to get a finalised version. Errore nel recupero dei dati Effettua l'accesso per consultare il tuo portafoglio Errore nel recupero dei dati Errore nel recupero dei dati Errore nel recupero dei dati Errore nel recupero dei dati
