Given the exceptional circumstances of the Russian invasion of Ukraine, all weapons at our disposal are likely to be scrutinized, including changes in tax law
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Following the collapse of the Soviet Union, President George H.W. Bush sought to promote economic growth in former Soviet republics and made tax treaty negotiations with Russia, Ukraine, and Kazakhstan a priority.... [+] Probably the most relevant historical precedent is the anti-apartheid sanctions that the United States imposed on the Republic of South Africa during the 1980s. With a 313-83 vote in the House and a 71-21 vote in the Senate, Congress overrode the veto by President Reagan to enact the Comprehensive Anti-Apartheid Act of 1986.
The Joint Committee on Taxation estimated the denial of those credits would raise $57 million over three years. That was a burden not on the South African government but on U.S. companies doing business there. Several experts at Tax Analysts expressed doubt about the advisability of denying foreign tax credits to Russia. Although the hoped-for long-term effect would be to reduce investment in Russia, which would pressure the government to change its course of action in Ukraine, the immediate adverse financial effect could be on U.S. companies. And worse still, distressed U.S. companies might sell their businesses to Russian investors at a discount.