Pension funds outside the United States may get relief from US taxes.

The United States does not usually tax foreigners on gains from passive investments in US shares, bonds or other assets. Investments in real property are an exception, after the farm lobby persuaded Congress that Japanese investors were driving up the price of family farms and making it harder for children of farmers to buy their own farms. A 1980 law called the Foreign Investment in Real Property Tax Act or FIRPTA requires foreigners to pay tax at ordinary income tax rates on gains from sales of US real property interests, after Congress decided it was too hard to draw a line solely around farmland.

The Obama administration proposed on March 29 that foreign pension funds be exempted from FIRPTA. The idea is to put them on the same footing as US pension funds, which do not pay taxes on gains from passive investments in US real property.

Tax changes like this one can take a long time to get through Congress. The next opportunity for such changes will not come until Congress takes up corporate tax reform. Most lobbyists do not expect action on corporate tax reform before 2014, although the tax-writing committees in both the House and Senate are starting to focus on the details.