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Bloomberg: US Company Ties to Foreign Adversaries Targeted in GOP Tax Bill

Businesses that use technology controlled by the Chinese government and other adversary nations would lose lucrative tax breaks under legislation proposed by a House Republican tax-writer.

Rep. Nathaniel Moran (R-Texas) is filing legislation obtained by Bloomberg Tax that would prevent businesses from claiming bonus depreciation, research and development expensing and credits, or business interest deductions if they use technology controlled by foreign adversaries.

Moran crafted the bill to pressure US companies in the energy and utility infrastructure sectors from using foreign-owned software that collects data on Americans or matters of national security, he said in an interview.

“It’s drafted broadly in an attempt at the outset to, frankly, smoke out some of the relationships and the dependencies that a lot of our companies in the United States have with foreign adversaries,” Moran said. “Shining a light in this area will change the behavior.”

The bill is among a growing collection of legislative maneuvers to pressure businesses to sever ties with China and other rival powers or otherwise starve them of taxpayer subsidies.

Republicans in their mega tax cut law last year restricted certain foreign-influenced entities from accessing clean-energy tax credits. Moran’s bill would add businesses that use technology sponsored by those countries to that blacklist.

Moran sits on both the Ways and Means Committee and Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party.

By Zach C. Cohen
Reporter Bloomberg Tax