MARY LOUISE KELLY, HOST:
A couple of tax measures in President Trump's One Big Beautiful Bill Act are causing consternation in the business community. Those tax measures have already passed the House. Now they're in the hands of the Senate. Our colleagues at The Indicator, Darian Woods and Adrian Ma, explain.
ADRIAN MA, BYLINE: Since the Reagan administration, the U.S. has encouraged global money to flow freely, but two sections tucked away in the big spending bill going through Congress could disrupt that - a tax on money immigrants send to their home countries and another measure that's been called a revenge tax. Let's start with the tax on immigrants sending money overseas, commonly known as remittances. It would be a 3.5% tax.
DARIAN WOODS, BYLINE: Now, would that apply to people on visas or green cards? That's unknown at this stage. Reuven Avi-Yonah is a tax law professor at the University of Michigan.
REUVEN AVI-YONAH: This is a totally new form of tax that United States has not tried before, and so there's a lot of details that are not clear.
MA: So is a tax on remittances good for American citizens? Reuven says that's hard to answer. The increased revenue for the U.S. government will be a plus, but he thinks the whole intent is actually to discourage immigration in the first place. And if that happened, that would reduce the amount of revenue that could be raised from remittances. If immigration decreased, America would also lose out on that labor, the skills and the talent those people bring.
Now, turning to the second big policy in the big, beautiful spending bill is the so-called revenge tax, which applies to certain foreign countries. Essentially, it means the U.S. government would add new taxes on American dividends and profits, rents and royalties, and some interest of these foreign investors.
WOODS: Yeah, so let's explain this with an example. Say I run a Canadian restaurant chain.
MA: Poutine Delight?
WOODS: That's a good name.
MA: (Laughter).
WOODS: So I have some Poutine Delight restaurants in the U.S., and this revenge tax would mean I have to pay an additional tax on the profits I get from selling to my U.S. customers.
MA: Which countries these actually are would be decided by the Treasury secretary. See, they would determine if other countries governments have been taxing U.S. companies unfairly. In international tax parlance, this is called discrimination.
AVI-YONAH: Discrimination in a tax context means that you're treating corporations from one country worse than your own corporations or worse than corporations from different countries.
WOODS: One example is the digital services taxes that countries like France and Canada are putting on platforms like Facebook and Google.
MA: Reuven sees problems with the U.S. fighting back, though.
AVI-YONAH: They were just in Canada. The Canadians love their digital services tax.
WOODS: And critics here are also concerned that it could impede foreign investment. There is a potential way that overseas companies could invest in the U.S. while avoiding the extra tax. Reuven Avi-Yonah sees the so-called revenge tax as losing a lot of its bite when a company from, say, Canada again, could simply start a new subsidiary in the U.S.
MA: Poutine Delight USA.
WOODS: Precisely - different paperwork, American in name only, but they might avoid the tax. There is one big exception, though - banks, which can't do that.
MA: We called and emailed Jason Smith, the Republican chair of the House Ways and Means Committee who helped draft the bill. He didn't get back to us by our deadline, but at a recent panel, he described the measure as a way to deter other countries from taxing U.S. companies unfairly.
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JASON SMITH: So that they understand that if they do that to U.S. businesses, there will be consequences for their actions. Hopefully, it'll never take an effect.
WOODS: Hopefully, it'll never take effect. So it sounds like Jason Smith understands that if these measures are implemented, they could be economically disruptive. Darian Woods.
MA: Adrian Ma, NPR News.
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