Trump delivers Democrats’ dream corporate tax

Billionaire entrepreneur Mark Cuban, a vocal critic of Donald Trump, startled political observers this week by urging Democrats to thank the president for doing what they “have NEVER been able to do”: Impose a revenue skim on two of America’s most profitable tech companies.

“Hey @AOC, @BernieSanders, @SenSchumer, @SenWarren — every Dem should be thanking @potus for doing what the Dems have dreamed of doing, but have NEVER been able to do,” Cuban posted on X on Aug. 11. “He is going to generate corporate tax revenue that you guys only wish you could pass.”

Cuban was referring to a new Trump administration deal requiring the leading chipmakers Nvidia and AMD to pay the U.S. government 15 percent of revenue from sales of certain artificial intelligence chips to China — a condition for receiving export licenses.

While the White House has avoided calling it a tax, Cuban labeled it a “billionaire’s sales tax” and “the ULTIMATE wealth tax,” framing it as the kind of corporate levy progressives have long advocated for but failed to deliver.

An Unprecedented Chip ‘Commission’

The deal marks a sharp departure from standard export-control practices. Traditionally, companies apply for export licenses without paying a percentage of their sales to the government. But under this arrangement, the Commerce Department will grant licenses for Nvidia’s H20 and AMD’s MI309 chips — lower-performance versions of their top AI semiconductors tailored to meet prior U.S. security restrictions — but under the unusual condition that the companies hand over 15 percent of revenues generated from those sales.

Analysts estimate the policy could generate up to $3 billion annually for the Treasury. That’s pocket change in the context of a $7 trillion federal budget, but significant in terms of precedent.

“He took 15% of equity from a company,” Cuban wrote on X, adding, “That is the ULTIMATE wealth tax… a progressive dream!”

Cuban — who campaigned for Vice President Kamala Harris in 2024 — argued that Democrats have been too “dogmatic” in pushing traditional tax hikes instead of exploring unconventional leverage points. “They are so intent on income and wealth taxes on ‘oligarchs,’ they have no concept of leverage in business,” he said. “Trump does.”

Chris Miller, foreign policy scholar and author of Chip War: The Fight for the World’s Most Critical Technology, told Newsweek the deal also signals “a very significant shift in policy.”

He noted that the Trump administration had previously emphasized tightening restrictions on China but now “appears to have shifted toward prioritizing U.S. firms’ sales and deprioritizing the national security concerns that had dominated” earlier thinking.

Critics See Danger, Supporters See Pragmatism

For decades, Democrats have pushed to make big corporations “pay their fair share” through higher corporate tax rates, windfall profit taxes and even wealth taxes on billionaires. Yet those proposals rarely make it through Congress, even when it’s controlled by Democrats. The 2022 Inflation Reduction Act imposed a 15 percent minimum tax on large corporations’ book income, but more ambitious corporate tax hikes have failed.

“POTUS is more progressive when it comes to taxation than anyone in the progressive wing of the Dems has ever been. The Dems should be celebrating just how progressive it is,” Cuban wrote on X. “The irony.”

While Cuban celebrated the chip scheme as clever, U.S. Representative Raja Krishnamoorthi saw it as a dangerous misstep. The top Democrat on the House China Select Committee told Newsweek the administration was taking “one of our most important national security tools” — export controls — and twisting them into “a pay-to-play scheme with no clear legal authority, congressional oversight, or transparency.”

“You cannot treat something as both a national security threat and a revenue opportunity without signaling to Beijing that our principles and national security are for sale,” he said. If certain chips are too risky to sell, “those exports should be prohibited outright, not monetized.”

Orde Kittrie, a law professor at Arizona State University and former State Department attorney, agreed the arrangement is “inconsistent” with constitutional provisions reserving taxing power to Congress and prohibiting export duties. In an interview with Newsweek, he also questioned whether the funds could become “a kind of presidential slush fund” outside normal appropriation rules.

The risk of undermining export policy is also a concern for Derek Scissors, a China expert at the center-right think tank American Enterprise Institute. He told Newsweek the deal “looks like a pathway for export controls to be continually violated” by allowing companies to buy exemptions whenever it is profitable.

“They’re calling it a fee,” Scissors added. “Plain language says 15 percent of sales revenue is a tax.”

From a policy standpoint, Bill Reinsch, a former Commerce Department official now at the Center for Strategic and International Studies (CSIS), told Newsweek the precedent is “even more corrosive” because “the message it sends is that security is negotiable.”

“Licensing decisions should be based on a national security assessment of the items in question… not a payment,” he said.

But not everyone in the financial world sees danger. Eric Schiffer, investor and chairman of The Patriarch Organization, told Newsweek he agrees with Cuban’s take that the move is “a form of tax that you’d think Democrats would like.”

“Mark is correct,” Schiffer said. “But I don’t see the Trump administration applying it aggressively or broadly. It will be tactical and at the president’s discretion.”

He added that for Nvidia and AMD, it’s “a big win” because it reopens a market they had lost, and “paying a small fee is worth it for them.”

Legal and Political Uncertainty Ahead

Whether this move remains an isolated maneuver or signals a new model for extracting corporate revenue could hinge on how the courts — or Congress — respond. Critics like Kittrie note that Article I of the Constitution prohibits export taxes and reserves taxing authority for Congress, which could make the 15 percent revenue skim vulnerable to legal challenge.

“Article 1 Section 9 prohibits the imposition of export taxes or duties,” he said. “The 15 percent arrangement would appear to be exactly that, and thus prohibited to both Congress and the executive branch.”

On Capitol Hill, Krishnamoorthi has signaled the committee’s intent to scrutinize the deal, warning it risks undermining America’s credibility in enforcing export controls. If challenges emerge, they could also pull in trade law disputes at the World Trade Organization, where U.S. trading partners may view the measure as discriminatory or beyond the bounds of standard licensing fees.

Julien Chaisse, a trade law professor at City University of Hong Kong, told Newsweek such a case could attract multiple countries to join a WTO challenge, framing it as a dangerous precedent for tying export licenses to revenue transfers. He said the 15 percent requirement “far exceeds the administrative cost” of licensing and could be viewed as a disguised trade restriction.

And while Beijing has urged Chinese companies to avoid using those processors—particularly for government-related purposes—for now, Nvidia and AMD are paying, China is buying, and Cuban is applauding a president he often criticizes. As the billionaire put it on X: “Sometimes you have to find a different path to get the results you want. You can’t be dogmatic when you want to help people.”