Treasury Secretary Bessent Defends Tax Breaks for those who Invest in China

WASHINGTON, D.C. – Our tax system allows for lower tax rates for capital gains on stocks to incentivize Americans to make investments that grow our economy. Yet, Americans who invest in companies abroad and build the economies of other nations – even in adversarial nations such as China – are still able to receive this preferential tax treatment. Meanwhile, China provides preferential tax treatment to investments in China, but not those made in the United States.
At a recent hearing with Treasury Secretary Scott Bessent, I asked him a few simple questions: Can you think of a reason why the American tax code should provide enormous tax benefits like the capital gains allowance to Americans who invest in Chinese stocks? Don’t we prefer American capital to be invested in America?
To which he replied that while he would never bet against America, those that do, can and should be able to receive tax benefits.
In January, President Trump signed an executive order calling for an America First Trade Policy, but apparently that means America First so long as those who send our capital to China get massive tax breaks.
“The American people deserve a tax code that puts our workers, our industries, and our national interest ahead of foreign profits,” said Congressman Brad Sherman. “If the Trump Administration is serious about an “America First” agenda, it should start by ending tax breaks for those who ship capital—and opportunity—to China.”
Rewarding U.S. investors who invest in Chinese companies that may compete with or even threaten U.S. industries is not strategic. It’s not pro-worker. And it’s certainly not America First.
Last Congress, I introduced the bipartisan No Capital Gains Allowance for American Adversaries Act, which would eliminate the capital gains tax break for investments in companies based in China, Russia, Belarus, Iran, and North Korea. It would also eliminate a related tax break, the “step-up in basis” at death, for investments in such companies, and would direct the SEC to require disclosure that no tax breaks are available for these stocks. I plan to re-introduce this bill this Congress.
Watch my exchange – Here.
See a partial transcript – Here.
###