Trump, Republicans Agree to Cut Controversial ‘Revenge Tax’

President Donald Trump’s administration implored Congress to remove a controversial provision, found in both the House and Senate versions of the pending tax bill, that would raise taxes on foreign investments in the U.S. On Thursday, Senator Mike Crapo, R-Idaho, chair of the Senate Committee on Finance, posted on social media that congressional leaders will remove the provision.

The decision to eliminate the so-called “revenge tax” came after Secretary of the Treasury Scott Bessent announced Thursday on social media that the U.S. had secured a deal with other to exempt American companies from a separate global minimum tax.

The GMT is an internationally agreed-upon minimum rate of taxes to be paid by large multinational corporations. It set a proposed rate of 15% on profits. It was developed through the Organization for Economic Co-operation and Development and was supported by 137 countries. It was approved at the October 2021 G20 Summit in Rome and was effective in 2024.

That tax, championed by former President Joe Biden’s administration, aimed to curb corporate tax avoidance but faced strong opposition from Trump and Republican lawmakers, who argued it ceded control over the U.S. tax system to foreign governments.

Bessent, in a social media post, wrote the U.S. will now work with G20 nations and others to implement a new agreement on a broader, global scale.

“This understanding with our G7 partners provides greater certainty and stability for the global economy and will enhance growth and investment in the United States and beyond,” Bessent wrote. “By reversing the Biden administration’s unwise commitments, we are now protecting our nation’s authority to enact tax policies that serve the interests of American businesses and workers.”

The House’s version of the provision would have raised an estimated $116 billion in tax revenue over 10 years, according to the congressional Joint Committee on Taxation. The Senate’s scaled–back version would have raised about $52 billion, according to the committee. It is not clear if lawmakers will add anything to the bill to offset the loss of revenue from the elimination of this proposal.

Removal of the provision from the pending legislation follows aggressive lobbying by international business groups, which warned the measure would harm American workers and deter foreign investment in the U.S. The Investment Company Institute, the leading association representing U.S. investment funds, was one of the groups that rallied against the provision. The ICI wrote to Crapo, warning that the bill would hurt most foreign investments in U.S. stock markets, according to a letter obtained by CIO.

Crapo announced on social media Thursday that Congress would heed the administration’s advice and nix the provision from the tax bill.

“At the request of [Bessent] and in light of this joint understanding to preserve U.S. tax sovereignty and allow U.S. tax laws to co-exist with the Pillar 2 regime, we will remove proposed tax code Section 899 from the One Big Beautiful Bill Act, and we look forward to active engagement with Treasury on these important issues,” Crapo wrote.

Tags: Congress, foreign direct investment, Tax