House Passes Tax Bill Raising Levies on Foreign Investors from Discriminatory Countries

President Donald Trump's One Big Beautiful Bill (H.R. 1) includes a controversial provision, Section 899, aimed at imposing retaliatory taxes on foreign investors and companies from countries deemed to levy "unfair foreign taxes" on U.S. persons and businesses. This provision would increase U.S. federal income and withholding tax rates for certain foreign individuals and entities, potentially escalating by up to 20 percentage points, and targets countries imposing digital services taxes, undertaxed profits rules under OECD Pillar Two, and similar levies. The measure has sparked significant concern from foreign governments, investors, and multinational corporations, who warn it could deter investment in the U.S., harm economic growth, and escalate international trade tensions. Critics, including the UK Ambassador to the U.S., argue that such punitive taxes unfairly burden businesses and individuals rather than addressing disputes at the government level. A trade group analysis estimates the provision could cost the U.S. 360,000 jobs and $55 billion annually over a decade by reducing foreign direct investment and economic growth. The bill, having passed the House, now awaits Senate consideration where its fate and potential revisions remain uncertain.