America’s Tax on Foreign Investors - Section 899
Published: 2025-06-11
Status:
Analyzed
Published: 2025-06-11
Status:
Analyzed
Predictions from this Video
Incorrect: 0
Prediction
Topic
Status
Emmanuel Cau (Barclays) predicts that if Section 899 tax legislation passes, dollar assets will become less valuable for foreign investors.
"Emmanuel Cau at Barclays suggested in a note that the mere passage of the tax legislation could make dollar assets less valuable for foreign investors."
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Morgan Stanley predicts Section 899 would put pressure on the US dollar and disincentivize foreign investment in the US.
"Morgan Stanley say that Section 899 would put pressure on the dollar, and “disincentivizes foreign investment”"
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If Section 899 applies to US Treasury bonds, their yield is predicted to fall by approximately 1%.
"If it did, the yield on treasuries would fall by around 1% making them unattractive to foreign investors."
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A senior Wall Street executive predicts foreign investment in the US will definitely cool if Section 899 passes.
"A senior executive at a big Wall Street bank told the Financial Times that Section 899 is one of the more worrisome ideas to have come out of DC this year – saying - If this goes forward, it will definitely cool foreign investment in the United States."
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The Joint Committee on Taxation predicts Section 899 would raise $116 billion in US tax revenue over the next decade.
"According to the Joint Committee on Taxation, Section 899 would raise $116 billion dollars over the next decade"
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The Wall Street Journal suggests Section 899 legislation will never go into force.
"The Wall Street Journal has argued that Section 899 is just a negotiating tool and that US lawmakers don’t actually want to collect any revenue from it, suggesting that it will never go into force."
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The Joint Committee on Taxation forecasts that Section 899 would eventually cause the government to lose money by scaring off foreign investors and lowering American asset prices.
"The Joint Committee on Taxation forecasts that the provision would start to lose the government money by scaring off foreign investors and therefore lowering American asset prices."
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JD Vance believes Section 899 could raise trillions of dollars in US tax revenues.
"She says that some – like JD Vance - love the idea of imposing revenge taxes on foreigners, as it will play well with the Maga base – and he believes that it could raise trillions of dollars in revenues."
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If Section 899 taxes are implemented, the cost of investment in the US for foreigners is predicted to rise, reducing inbound investment, shrinking US capital stock, decreasing labor productivity, and lowering wages.
"The immediate effect of these taxes would be to raise the cost of investment in the United States for foreign-resident individuals or corporations. A higher cost of capital would reduce inbound investment, shrink the US capital stock, reduce labor productivity, and reduce wages."
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If Section 899 passes, it is predicted to be implemented on January 1, 2026.
"If the law passed it would be implemented on January first next year."
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If Section 899 is enacted, the US President could increase withholding taxes on dividends and interest on US stocks and bonds by 5% annually for four years, reaching up to 50%.
"if enacted, The US President would be able to apply an increase in taxes on dividends and interest on US stocks and bonds by 5 percent per year for four years – which would raise that withholding tax to as much as 50%."
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The passage of the Section 899 tax legislation could make dollar assets less valuable for foreign investors.
"Emmanuel Cau at Barclays suggested in a note that the mere passage of the tax legislation could make dollar assets less valuable for foreign investors."
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US debt interest payments will increase, and rise even more significantly if the US passes laws allowing the president to arbitrarily target investors.
"As the country borrows more – this will rise – and it will rise even more if the US starts passing laws that allow the president to target investors on a whim."
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If Section 899 reduces foreign demand for US Treasuries, the US government would have to pay higher interest rates to sell them, negating the tax's effect.
"If this tax reduces demand for treasuries – and the US still wants to sell them – they will have to pay a higher interest rate – which would just negate the tax"
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Many announced foreign investment projects in the US are likely to be halted due to business uncertainty.
"whether these announced investments are genuinely new or not, many of the projects are likely to be scuppered because of business uncertainty"
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If Section 899 passes, foreign firms are unlikely to invest new money in the US if their returns would be taxed at a 50% rate.
"I can’t imagine that if Section 899 is passed into law that any foreign firms will be moving money into the United States to have their returns taxed at a 50% rate."
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If Section 899 applies to US Treasury bonds, their yield would fall by approximately 1%, making them unattractive to foreign investors.
"If it did [apply to treasury bonds], the yield on treasuries would fall by around 1% making them unattractive to foreign investors."
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US Treasuries are likely to be exempted from Section 899.
"it seems likely that Treasuries would be exempted from Section 899, but that is not yet certain."
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If the 5% Section 899 tax hike is applied, US companies with gross-up obligations to foreign lenders would face an effective 5.3% increase in additional interest payments.
"they would find themselves paying 5.3% in additional interest if this 5% tax hike was applied."
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If Section 899 proceeds, it will definitively reduce foreign investment in the United States.
"If this goes forward, it will definitely cool foreign investment in the United States."
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Section 899 would put pressure on the US Dollar.
"Morgan Stanley say that Section 899 would put pressure on the dollar"
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If Section 891 causes capital flight, a full year would pass before the measure could be repealed.
"if Section 891 causes capital flight – a full year has to go by before it is repealed."
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Faced with trade and tax chaos, executives making large investment decisions will likely delay new investments and wait for clarity.
"it probably makes sense for them to hold off on that investment and wait for clarity."
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The Joint Committee on Taxation projects Section 899 would raise $116 billion in revenue over the next decade.
"the Joint Committee on Taxation, Section 899 would raise $116 billion dollars over the next decade"
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The Wall Street Journal suggests Section 899 is a negotiating tool and will never go into force.
"The Wall Street Journal has argued that Section 899 is just a negotiating tool and that US lawmakers don’t actually want to collect any revenue from it, suggesting that it will never go into force."
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The Joint Committee on Taxation forecasts Section 899 would likely reduce government revenues (rather than raise them) by scaring off foreign investors and lowering American asset prices.
"Section 899 is a rare tax hike on the wrong side of the Laffer Curve (meaning that it is a tax hike that would likely reduce rather than raise revenues). The Joint Committee on Taxation forecasts that the provision would start to lose the government money by scaring off foreign investors and therefore lowering American asset prices."
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If Section 899 is enacted, US companies might reduce or eliminate dividends and switch to stock buybacks to retain foreign investors.
"If section 899 was enacted - US companies could decide to reduce or eliminate dividends and switch to stock buybacks instead in order to avoid losing their foreign investors."
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Companies in countries targeted by Section 899 could redomicile to another country to avoid the US tax.
"companies located in countries targeted by section 899 could choose to redomicile in a different country to avoid being taxed."
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If Section 899 becomes law, international investors may reduce their exposure to US assets before the tax is implemented.
"if section 899 becomes law – they might want to reduce their exposure to US assets before the tax is actually implemented."
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US investors might see their investment values fall as foreign investors sell due to Section 899.
"US investors either – as they might see the value of their investments fall as foreign investors sell"
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US investors might see interest rates for businesses they invest in rise as those businesses are forced to gross up payments to foreign lenders under Section 899.
"see the interest rates the businesses they invest in rise – as they are forced to gross up foreign lenders."
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If Section 899 is enacted, the pool of available capital for US businesses seeking to raise funds would dry up.
"the pool of available capital would dry up."
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JD Vance believes that imposing Section 899 could raise trillions of dollars in revenues.
"some – like JD Vance - love the idea of imposing revenge taxes on foreigners, as it will play well with the Maga base – and he believes that it could raise trillions of dollars in revenues."
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Actions like Section 899 are likely to undermine global trust in the United States.
"this is another action that is likely to undermine global trust in the United States"
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Section 899 would immediately raise the cost of investment in the US for foreign entities, leading to reduced inbound investment, a smaller US capital stock, lower labor productivity, and reduced wages.
"The immediate effect of these taxes would be to raise the cost of investment in the United States for foreign-resident individuals or corporations. A higher cost of capital would reduce inbound investment, shrink the US capital stock, reduce labor productivity, and reduce wages."
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If Section 899 passes, it would be implemented on January 1, 2026.
"If the law passed it would be implemented on January first next year."
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