Many Happy Returns Section 899: America’s Revenge Tax on International Investors
33 snips
Jun 4, 2025 The US is considering new tax policies that could be a game changer for international investors. Discussions revolve around retaliatory levies deemed as 'revenge taxes' and their potential impact on investor confidence. The implications for US capital markets and multinational operations are significant, especially regarding increased withholding taxes. There’s also a deep dive into capital flight, exploring how investors withdrawing funds could destabilize economies and what that means for global investment dynamics.
AI Snips
Chapters
Transcript
Episode notes
Broad US Tax Designation Power
- The US Treasury has broad authority to label any foreign tax as unfair.
- Designation triggers escalating surtaxes until the foreign country removes the deemed unfair taxes.
Tax as a Capital Flow Lever
- Section 899's surtaxes function as soft capital controls by raising the cost for foreign investors.
- This approach uses pricing to influence capital flows without explicit investment restrictions.
Withholding Tax Compounds Over Time
- Increasing withholding tax from 15% to potentially 35% on US dividends reduces long-term investor gains by about 15% over 30 years.
- Small increases in fees or taxes compound significantly over time, impacting net returns.