The Trump administration moves to strip 'revenge tax' from GOP megabill

The Trump administration moved Thursday to strip a controversial tax provision from Republicans' enormous domestic policy bill after securing an "understanding" that American companies won't be obligated to comply with a 15% global minimum tax agreement.

The maneuver comes as negotiations intensify around the GOP megabill in Congress. Republicans are still haggling over many parts of the legislation, and the White House had signaled in recent days that the so-called "revenge tax" could be stripped from the bill if ongoing trade negotiations went their way.

"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," Treasury Secretary Scott Bessent said on X.

Sen. Mike Crapo of Idaho and Rep. Jason Smith of Missouri, the chief GOP tax writers, said they would remove the measure. "Congressional Republicans stand ready to take immediate action if the other parties walk away from this deal or slow walk its implementation," they said in a joint statement.

Section 899, or the revenge tax, would impose a punitive tax of up to 15% on companies and investors from countries the White House determines is taxing U.S. businesses unfairly. The measure attracted considerable scrutiny from investors who feared it would diminish appetite for foreign investment in the U.S. It was intended to coerce other countries away from enforcing a global tax agreement struck by then-President Joe Biden.

Republicans had long loathed the Biden-era tax deal with member countries of the Organization of Cooperation and Economic Development. The 2021 OECD deal set in motion a new 15% tax on multinational firms' profits regardless of where they are headquartered, and 140 countries signed on. Republicans, though, argued it was punitive towards U.S. businesses.

GOP lawmakers cheered Bessent's announcement. "We are moving in the right direction to protect American tax sovereignty and American multinationals," Oklahoma Republican Rep. Kevin Hern, chair of the House GOP Policy Committee, said in a statement.

The removal of the revenge tax does eliminate another revenue source from the legislation, which has been whittle down procedurally in recent days and compelled the GOP to quickly devise alternatives. The measure drafted by Senate GOP tax writers would generate $52 billion over a decade, less than half of the House's more aggressive version.

"The revenue here was always a bit speculative, given part/all of the intent of 899 was to get countries to change their behavior," Andrew Lautz, a tax expert at the Bipartisan Policy Center, wrote on X.