GOP Kills ‘Revenge Tax’ In Trump’s Megabill, Wall Street Breathes Easy

Wall Street analysts are breathing a major sigh of relief this morning following overnight news that President Trump’s ‘One, Big, Beautiful Bill’ will not include the controversial Section 899 “revenge tax” proposal. The announcement came after Treasury Secretary Scott Bessent posted on X, noting that productive discussions with international trade partners have helped “defend American interests.”

Trump’s support for Section 899 stems from his economic nationalism agenda and desire to penalize foreign countries that discriminate against U.S. companies through digital services taxes and other taxes. This was primarily aimed at countering the taxation of U.S. firms by several European countries, as well as Canada and Australia.

“Based on this progress and understanding, I have asked the Senate and House to remove the Section 899 protective measure from consideration in the One, Big, Beautiful Bill. 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,” Bessent wrote in a series of X posts. 

He continued, “By reversing the Biden Administration’s unwise commitments, we are now protecting our Nation’s authority to enact tax policies that serve the interests of American businesses and workers,” adding, “We are also preserving our tax base, preventing the loss of over $100 billion in American taxpayer dollars according to Treasury estimates and the non-partisan Joint Committee on Taxation.”

“The Trump Administration remains vigilant against all discriminatory and extraterritorial foreign taxes applied against Americans. We will defend our tax sovereignty and resist efforts to create an unlevel playing field for our citizens and companies,” Bessent noted. 

Shortly after Bessent’s comments, Finance Committee Chairman Mike Crapo (R-Idaho) and House Ways and Means Committee Chairman Jason Smith (R-Missouri) issued statements on Section 899 and the OECD Pillar 2 / global minimum tax project:

“At the request of Secretary Bessent and in light of this joint understanding to preserve U.S. tax sovereignty and allow U.S. tax laws to co-exist with the Pillar 2 regime, we will remove proposed tax code Section 899 from the One Big Beautiful Bill Act, and we look forward to active engagement with Treasury on these important issues.” 

At the request of @SecScottBessent and in light of this joint understanding to preserve U.S. tax sovereignty and allow U.S. tax laws to co-exist with the Pillar 2 regime, we will remove proposed tax code Section 899 from the One Big Beautiful Bill Act, and we look forward to…

— Senator Mike Crapo (@MikeCrapo) June 26, 2025

Gennadiy Goldberg, head of U.S. rates strategy at TD Securities, penned a first take note earlier to clients, calling the move by Bessent a “sigh of relief.” 

“Removing Section 899 from the budget negotiations would potentially allow investors to breathe a sigh of relief,” Goldberg said, adding, ”That said, it’s difficult to know if the market seriously expected this statute to make it into the final law.”

Deutsche’s global head of macro research, Jim Reid, told clients:

“We are also waiting to see if the U.S. administration will pass its budget megabill as they hope by the July 4th holiday. Senate Republicans have been aiming to vote on the bill this week but that timing looks uncertain, with the latest issue being a technical hurdle that some of the proposed Medicaid changes do not meet the strict rules of the reconciliation process that allows to approve budget policies with a simple majority in the Senate. So that could force meaningful last minute changes. One to monitor going into the weekend. There is good news that late last night we found out that the U.S. Treasury Department has asked the Senate and the House to remove Section 899 (aka the “revenge tax”) from the bill after a deal was struck with G7 leaders to exempt U.S. companies from some taxes. Given how much email traffic there’s been in my inbox on this topic, it’s fair to say global investors will breathe a sigh of relief on this news.” 

Goldman Sachs chief economist Jan Hatzius noted that “the Senate looks likely to pass the fiscal package by this weekend, though several unresolved issues could delay passage until early July.” 

Hatzius provided clients with five key points surrounding the new developments:

1. Senate Finance Committee Chairman Crapo and House Ways and Means Committee Chairman Smith announced that they would remove the provision to increase taxes on foreign investors, businesses, and governments known as Section 899.

2. This follows an announcement from Treasury Secretary Bessent that the U.S. has reached an understanding with other G7 countries to exclude U.S. companies from the tax, and that the U.S. would work to implement this agreement in the OECD framework in coming weeks and months. While Sec. Bessent did not elaborate on what the understanding includes, it seems likely to involve a deal with other countries to grandfather the existing U.S. tax on global intangible low-tax income (GILTI) as a qualified tax under the OECD rules, which would have the effect of reducing foreign taxes on U.S. companies.

3. The Senate’s version of Sec. 899 had already been scaled back from the House’s provision, but would have raised an estimated $52bn/10yrs. While removing the provision will add to the estimated cost of the bill, the international tax agreement could offset some or all of this, as it would likely result in U.S. multinationals paying a greater share of their tax liabilities to the U.S. and a smaller share to other jurisdictions.

4. While it now looks unlikely that Congress will pass Sec. 899 or something like it this year, we note that the president currently has authority under another longstanding section of law (Sec. 891) to double the tax on foreign individuals and corporations in response to discriminatory or extraterritorial taxes on U.S. entities. In light of the announced agreement, there is little reason to expect this authority to come into play, though it could become relevant if other countries do not follow through with the understanding that Sec. Bessent has announced.

5. The Senate looks likely to pass the fiscal package by this weekend, though several unresolved issues could delay passage until early July. The odds of enactment into law by early July have risen, though we still see a fair chance this could slip to later in July or early August, depending on how long the Senate takes to pass the bill and the extent of disagreements between the House- and Senate-passed versions of the bill.

The big takeaway is that some of Wall Street’s top analysts are relieved after the Trump administration dropped the controversial Section 899 from its massive fiscal bill.