Core Points - The "Big and Beautiful" bill promoted by President Trump includes a controversial tax provision (Section 899) aimed at foreign investors, which has faced strong opposition from multinational corporations [1][2] - Executives from around 70 global companies are lobbying against this tax plan, warning it could threaten millions of American jobs [2][3] - The provision allows the U.S. to impose additional taxes of up to 20% on companies from countries with punitive tax policies, potentially affecting a wide range of foreign entities [2][4] Group 1 - The tax provision could lead to a significant reduction in foreign investment in the U.S., with concerns that it may force many multinational companies to close their U.S. operations, jeopardizing approximately 8.4 million jobs [2][3] - The International Bankers Association, representing top global banks, is advocating for a delay and revision of the tax plan to protect international investments in the U.S. [3][4] - The provision is seen as a negotiation tool by the Trump administration, aimed at increasing leverage in trade discussions with other countries [3][6] Group 2 - The Congressional Budget Office estimates that Section 899 could generate $116 billion in tax revenue over the next decade, but the overall bill may increase U.S. debt by $2.4 trillion by 2034 [4] - Financial institutions like Goldman Sachs suggest that European companies may consider re-listing in the U.S. as a strategy to mitigate the impact of the tax, although tax experts warn this may not be a straightforward solution [5][6] - The provision could exert downward pressure on the U.S. dollar and diminish the motivation for foreign investment, affecting both U.S. and foreign companies significantly [5][6]

本周，数十家跨国公司高管本周集体涌向华盛顿游说国会，试图阻止特朗普预算法案中一项可能重塑国 际资本流动格局的条款，警告这一措施将冲击数百万美国就业岗位。 6月9日，据报道，全球商业联盟主席Jonathan Samford透露，约70家公司的代表将于本周与国会议员 会面，第899条款将成为"核心议题"。 这一税收威胁已令该游说组织近200家在美外资企业感到不安， 其中包括壳牌、丰田、SAP和LVMH等巨头 。 数据显示这一担忧并非空穴来风： 外资银行在美国承销了70%以上的外国公司债务发行，占美元计价 债务发行总额的近三分之一 。 2023年，这些外资银行向美国公司放贷超过1.3万亿美元，其国际融资业务支撑了5.4万亿美元的外国直 接投资，创造了2700亿美元收入。 "希望第899条款不会被实施" 据悉， 这些外资企业在美国提供了840万个就业岗位，而第899条款的实施可能直接威胁到这一庞大的 就业基数 。 这场史无前例的游说攻势直指特朗普"大漂亮"税收法案中的第899条款——一个被外界视为"资本驱逐 令"的条文。该条款一旦获得国会批准，将允许美国对来自"税收政策惩罚性"国家的公司和投资者征收额 外税收。 税收 ...

Group 1: Core Insights - The "mysterious 899 clause" in U.S. tax law may escalate trade tensions into a capital war, imposing punitive tax burdens of up to 20% on foreign investors, particularly targeting countries like the EU that do not comply with U.S. trade demands [1][3] - Major Wall Street institutions warn that this clause could fundamentally alter the tax treatment of foreign capital in the U.S., being described as a "nuclear option" by the Trump administration [1][3] Group 2: Details of the 899 Clause - The 899 clause, officially known as "Enforcement Measures Against Unfair Foreign Taxes," is part of the recently passed "One Big Beautiful Bill Act" [2] - It aims to impose retaliatory taxes on non-U.S. individuals, companies, and governments from countries deemed to impose "unfair/discriminatory" taxes on U.S. entities [3] Group 3: Definition of "Discriminatory" Taxes - "Discriminatory" taxes include Digital Services Taxes (DST), Digital Profit Taxes (DPT), and low-tax profit rules under the OECD's global minimum tax framework [4] - The U.S. opposes the OECD framework, arguing it disproportionately affects American companies with significant global influence [4] Group 4: Tax Implications - The 899 clause could raise the statutory tax rate on U.S.-sourced income from interest, dividends, rents, and royalties by up to 20 percentage points for countries considered "discriminatory," increasing by 5 percentage points annually [5] - Investment portfolio interest may be exempt, but non-U.S. financial institutions relying on treaty-based exemptions could still be affected [6] Group 5: Revenue Projections - The 899 clause is expected to generate approximately $120 billion in tax revenue over ten years, equating to an annual increase of $12 billion, which is relatively minor compared to the overall U.S. tax landscape [7] Group 6: Impact on U.S. Deficit - The clause may influence foreign demand for U.S. assets, potentially helping to reduce the current account deficit, although rising yields could offset some revenue gains [8] Group 7: Legislative Uncertainty - There is uncertainty regarding the passage of the 899 clause in the Senate due to potential jurisdictional issues and the delegation of tax powers to the executive branch [9] Group 8: Affected Companies - Goldman Sachs has begun assessing the risk exposure of EU companies to the 899 clause, creating a "GS EU 899 Clause Basket" that includes firms with significant U.S. sales [10] - The basket consists of companies with an average U.S. sales exposure of about 48%, while excluding those with high U.S. ownership [10] Group 9: Market Performance and Valuation - Despite better earnings expectations for the GS EU 899 Clause Basket compared to the GS Domestic Quality Basket, its performance has weakened since early May, with current valuations still above historical ranges [12] - High trading congestion and negative earnings momentum for the GS EU 899 Basket suggest continued pressure on performance [14]

Core Viewpoint - The article discusses the potential impact of the tax provision 899 in the "Big Beautiful Act," warning that it could lead to the largest capital tax shock in history for Wall Street, particularly affecting foreign investors in U.S. assets [1][3][12]. Group 1: Tax Provision 899 - Provision 899 introduces a punitive tax structure for investors from countries deemed to have "discriminatory" tax policies, starting with a 5% increase in tax rates, escalating by 5% annually, up to a maximum of 20% [3][4]. - The provision's scope is broad, potentially affecting various forms of income, including passive income, real estate investments, and business profits, which could impact previously exempt entities like foreign central banks and sovereign wealth funds [3][4]. Group 2: Market Implications - If the provision applies to U.S. Treasury bonds, it could lead to a steepening of the yield curve, a weakening of the dollar, and an expansion of credit spreads, as foreign investors may react quickly to tax changes [2][8][12]. - The report indicates that foreign investors hold a significant portion of U.S. debt, with total liabilities to foreign entities reaching $39.8 trillion, of which 83% are securities [4][6]. Group 3: Sector-Specific Effects - The tax changes could disproportionately affect corporate bonds, where foreign investors hold about 25% of the market, potentially leading to liquidity pressures and increased volatility [12][13]. - Commercial real estate (CRE) could see greater valuation impacts due to the higher foreign buyer percentage compared to residential real estate [15]. Group 4: Hedge Fund Risks - Hedge funds may face significant challenges as the tax rate increase could eliminate arbitrage opportunities, fundamentally disrupting the business models of those relying on cross-border arbitrage in U.S. markets [17]. Group 5: Legislative Outlook - The Senate is viewed as a critical player in clarifying the applicability of provision 899, with potential adjustments to the scope and implementation timeline [20][21]. - There is uncertainty regarding the worst-case scenario of the provision's implementation, with estimates of revenue generation potentially being significantly underestimated if all foreign-held assets are taxed [18][19].

Core Viewpoint - The introduction of Section 899 of the "Big Beautiful Act" poses a significant threat to Wall Street, potentially leading to the largest capital tax impact in history, particularly affecting foreign investors in the U.S. market [1][2]. Tax Implications - Section 899 introduces a "progressive penalty tax" for investors from countries deemed to have "discriminatory" tax policies, starting with a 5% increase in tax rates, escalating by 5% annually, with a maximum additional burden of 20% [2]. - The scope of this tax is extensive, potentially impacting passive income, real estate investments, business profits, and even foreign central banks and sovereign wealth funds that previously enjoyed tax exemptions [2]. Market Impact - The ambiguity surrounding whether financial assets will be included in the tax scope raises concerns among experts, despite current indications suggesting fixed income assets may be excluded [3]. - As of December 2024, U.S. liabilities to foreign entities are projected to reach $39.8 trillion, accounting for 134% of nominal GDP, with securities holdings comprising 83% and long-term securities at 96% [3]. Foreign Investment Dynamics - Foreign official investors hold a significantly larger share of U.S. fixed income markets compared to equities, meaning any tax policy changes could directly affect U.S. Treasury yield curves [6]. - The report indicates that foreign private investors tend to hold longer-term Treasuries, while official investors prefer shorter maturities, suggesting that rising tax costs could lead to greater selling pressure on long-term bonds [8]. Regional Effects - Europe is likely to be the biggest "victim" of these tax changes, with $3.5 trillion of the $5.39 trillion in foreign direct investment in the U.S. coming from Europe, making Eurozone countries the largest holders of U.S. fixed income and equity securities [11]. Currency and Credit Market Effects - The tax implications signal a negative outlook for the U.S. dollar, as the 4% current account deficit heavily relies on foreign capital inflows, and the new tax could deter foreign investment, leading to a weaker dollar against G10 currencies [14]. - In the corporate bond market, liquidity pressures and credit spreads may widen, with foreign investors holding about 25% of U.S. corporate debt, which could face volatility if additional tax burdens are imposed [14]. Securitized Products and Real Estate - Foreign investors show a stronger demand for agency bonds compared to securitized credit; unfavorable tax policies on non-government-backed assets could benefit GNMA mortgage-backed securities (MBS) [15]. - In commercial real estate (CRE), where foreign buyers account for 5-10% of transactions, tax changes could have a more pronounced impact on valuations compared to residential real estate [15]. Hedge Fund Risks - The definition of "applicable persons" in the tax clause could significantly affect hedge funds, as a 20% tax rate increase could eliminate arbitrage opportunities, fundamentally disrupting the business models of quantitative hedge funds reliant on U.S. markets [17]. Legislative Outlook - The likelihood of the worst-case scenario materializing from Section 899 remains uncertain, with the primary aim of the clause being to provide leverage in tax and trade negotiations [18][21]. - The Senate is seen as a potential "lifeline" to clarify the applicability of Section 899, with expectations that it may review the details, including income scope and applicable entities [22].

Core Points - The Senate is currently reviewing the "Section 899 Tax Clause" (referred to as the "Capital Tax") within a tax proposal [1] Group 1 - The Republican leader in the Senate, Mitch McConnell, is leading the review of the tax proposal [1]