Investment Groups Call for Exemption of Passive Income from US Tax Bill

NEW YORK (Reuters) - A coalition of six investment groups representing sectors including fund managers, venture capital, and real estate has sent a letter to two Senate Republicans expressing their concerns over a provision in the tax and spending bill currently under debate that targets foreign investors. The proposal would allow the imposition of new taxes on residents, businesses, and other entities from countries that are found to impose "unfair foreign taxes." This includes income from investments, rents, and dividends. The investment groups argue that the levy, which could impose a progressive tax burden of up to 20% on foreign investors' passive income, could spook investments in the U.S. They warn that the new tax "would significantly disrupt U.S. public and private debt and equity markets." The letter, which was sent to Senate Majority Leader John Thune and Senate Finance Committee Chairman Mike Crapo on Monday evening, was jointly submitted by the Managed Funds Association, American Investment Council, Investment Company Institute, Loan Syndications and Trading Association, National Venture Capital Association, and the Real Estate Roundtable. In notes to clients, many Wall Street analysts have cautioned that the levy could end up weighing on demand for U.S. assets. Multinational companies have said they could shut down operations in the U.S.

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