Trump’s new bill threatens major tax increases for Canadian companies
Trump’s new bill threatens major tax increases for Canadian companies
[https://archive.ph/Gz69T](archived link)
So they want to disincentive direct foreign investment now? Can someone explain to me under what set of assumptions this makes economic sense?
Autarky.
That's the four dollar word for when a nation closes off all forms of outside trade and supplies all its own needs internally.
It doesn't work.
And it's a core tenet of fascism.
The reason why autarky appeals is because an autarkic nation can freely engage in hostilities with anyone they want to, without fear, because they don't depend on anyone else for anything. See Nazi Germany.
It's an incredibly stupid notion. While unrestricted free trade is not by any means good, some amount of trade is simply far more effective and efficient than trying to be an island. And trade is an excellent means of extending soft power.
Trump hates soft power. He doesn't understand it, so it's bad. To him, hard power is the only thing that matters. Being the biggest, the strongest, the toughest. It's the politics of a bully. He wants an army with a nation attached, endlessly manufacturing weapons, food and medicine to supply the troops as they goose-step across the world.
The amount of soft power he's thrown away while describing it all as a "bad deal" and "getting screwed" is astounding. Like.... the U.S. established the world order almost unilaterally, and it's remained mostly steady for decades. You're just the first president dumb enough to not understand it.
Whatever, it's probably best for almost everyone else in the world to renegotiate those terms, thanks for forcing the issue. Well, except that it seems China is the one brokering the new world order to its favour while Trump parades around like a peacock.
It doesn't, Nazis are trying to make him a king and start ww3.
Stop joking about it and start realizing what's actually happening.
This isn't "Americans are dumb". This is "oh fuck, America has had hostile, contagious cancer for a long time and it's metastasizing rapidly."
We're terrified and angry and don't really know what to do out of fear of retaliation or being disappeared.
Canadian individuals who own U.S. securities directly are subject to a 15-per-cent withholding tax rate under the current treaty, reduced from the statutory rate of 30 per cent. If section 899 were to become law, the withholding rate could ultimately rise to 50 per cent.
Ian Bragg, vice-president of research and statistics at the Securities and Investment Management Association, said that the current draft of the legislation could cost Canadian investors more than $81-billion in additional taxes over seven years.
“These measures would penalize ordinary Canadians saving for retirement, education, or other long-term goals, and create unnecessary uncertainty in the market,” Mr. Bragg said in an e-mailed statement. “It’s critical that this issue be addressed at the highest levels of Canada-U.S. trade discussions to protect the savings and financial security of millions of Canadians.”
Max Reed, a cross-border tax lawyer and principal of Polaris Tax Counsel in Vancouver, said if the bill is enacted, section 899 would “rupture” the Canada-U.S. tax relationship the same way that Trump‘s tariffs have impaired the Canada-U.S trade relationship.
“The results would be significant,” Mr. Reed said in an online post to clients. “Virtually all cross-border planning would be turned on its head.”
The tax bill also removes long-standing tax exemptions for governments and related entities from targeted companies. That means organizations such as the Canadian Pension Plan Investment Board and First Nation communities could be required to pay tax.
For Canada’s multinational companies with operations in the U.S., the proposed tax changes will place them at a competitive disadvantage to domestic U.S. companies and to subsidiaries of other foreign multinationals that don’t have similar discriminatory taxes, said Ron Nobrega, a tax partner at Fasken Martineau DuMoulin LLP in Toronto.
Paywalled, can't read it.
Does this mean I would pay taxes just for holding US securities (eg., stocks in US companies)? Or only when selling? Does it make any difference which brokers are used?
"Canadian corporations that receive dividends from U.S. subsidiaries are currently subject to a 5-per-cent withholding rate under the tax treaty between the U.S. and Canada, much lower than the statutory rate of 30 per cent.
But under section 899, Canadian companies would see their tax rate increase by five percentage points each year until it reaches 20 percentage points above the statutory rate, or 50 per cent. It would remain in place until the “unfair tax” is removed.
Similarly, Canadian individuals who own U.S. securities directly are subject to a 15-per-cent withholding tax rate under the current treaty, reduced from the statutory rate of 30 per cent. Under section 899, the withholding rate could ultimately rise to 50 per cent"
He's strong arming our government to drop trade barriers, going after pensions and investors who can't switch their investments without a capital gain tax. It would screw me over dramatically.
yeah and at the same time we should definitely join in building his fucking golden dome, right folks?
Dividends on AAPL are fairly flimsy relative to its year-over-year performance. It’s not enough for me to dump mine but this is just petty.
At scale I can see a pension fund swapping in international stocks. When that happens US stocks will go down anyways so wheeeee.
“Unfair” tax? Everything is unfair when he can’t take total advantage of somebody. What an emotional baby.
If those withholding tax changes go through, I wonder if the Canadian government would ease capital gains rules on impacted investments as long as something specific was done with them.
Thats going to impact nearly everyone in some way or another be it pensions or personal investments.
Ha! Now you upstairs neighbors HAVE to come save us!
Pwease? Uwu?
They really do not want my money I guess.
Now I have to figure out the consequences of this and whether I need to just drop my US holdings and how index funds are affected.
I believe index funds would be affected. Easiest way to cut the US out of your portfolio is a combo of ZCN and VIU.