Lawmakers in Washington have introduced a proposal that would create a new tax rule aimed at foreign countries with certain types of tax policies the U.S. considers unfair. The measure is part of a broader trend toward protecting U.S. economic interests in global tax policy.
The rule—if enacted—would allow the U.S. to raise taxes on income connected to countries that impose taxes seen as targeting American businesses unfairly. This includes things like digital services taxes, profit-shifting rules, or similar policies that the U.S. Treasury views as disproportionately affecting U.S. companies.
The proposed mechanism would gradually increase U.S. tax rates on income such as dividends, interest, royalties, and real estate gains linked to those countries. The increase could reach up to 20% above standard rates and, in some cases, override the tax treatment granted under existing U.S. tax treaties.
This approach is consistent with a larger “America First” tax policy outlook—prioritizing U.S. companies and tax sovereignty in response to international measures that are viewed as extraterritorial or discriminatory.
If passed, the rule could influence how foreign governments, investment entities, and funds structure their U.S.-connected investments. It may also add new layers of complexity to the broader landscape of cross-border taxation.
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