Trump Plans Foreign Tax Increase To Protect US Businesses


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In a significant policy move, former President Donald Trump has indicated he might double tax rates for foreign nationals and companies as a countermeasure against what he perceives as unfair taxation of American multinational corporations.

This potential action was outlined in Trump’s recent “America First” trade policy memorandum, which referenced Section 891, a rarely-discussed tax provision from the 1930s. The provision, originally created during a tax dispute between the United States and France, grants the president authority to impose punitive taxes on foreign entities.

The Treasury Department has been directed to examine whether any foreign nations are implementing discriminatory or extraterritorial taxes against U.S. citizens or corporations. According to Alex Parker, tax legal affairs director at Eide Bailly, “initiates the process to apply Section 891,” a “century-old, never-used statute” that would allow the Treasury to “double taxes on taxpayers from countries engaging in discrimination against the U.S.”

This development coincides with Trump’s move to distance the United States from the 2021 international tax agreement, which established a 15% global minimum corporate tax rate and was endorsed by 130 countries. While the U.S. Congress never ratified the agreement, American companies currently face a global minimum tax of approximately 10%. Meanwhile, nations like the United Kingdom have implemented the full 15% rate and could potentially seek additional payments from U.S. corporations paying lower rates.

Trump’s memorandum explicitly states that it “recaptures our nation’s sovereignty and economic competitiveness by clarifying that the Global Tax Deal has no force or effect in the United States.”

Everett Eissenstat, a partner at Squire Patton Boggs, told the Financial Times that this action appears targeted at “jurisdictions where corporations have housed a lot of their intellectual property like Ireland, and it also likely gets at what the EU is doing on trying to extract more revenues from U.S. tech companies.”

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