Is Revenge A Dish Best Served Under The Tax Code?

Among the myriad provisions of the budget bill that passed the U.S. House of Representatives last month, one that has recently gained increased prominence in recent weeks is proposed Section 899, increasingly referred to as the "revenge tax." This provision, a form of which was also included in the draft legislative text released by the Senate Finance Committee on June 16, imposes increased tax rates on residents of jurisdictions imposing so-called "unfair foreign taxes" ("UFTs") on U.S. taxpayers and their subsidiaries. While most of the changes in the Senate's draft moderate or clarify exemptions to the provisions contained in the House's draft, it also contains language that would grant the president discretion to double taxes on corporations and citizens of countries imposing UFTs.