tax breaks/intra class conflict redux
Congress Weighs Corporate Tax Breaks Lawmakers Look to Help Manufacturing Sector While Averting Conflict Over Export Subsidy By Jonathan Weisman Washington Post Staff Writer Tuesday, October 14, 2003; Page E01 Congressional tax writers are rushing to complete legislation that would offer tens of billions of dollars in new U.S. corporate tax breaks, many of them for overseas operations, setting off a lobbying battle between major domestic manufacturers and some of the largest multinational corporations in the world. Driven by a Dec. 31 deadline, lawmakers hope to end a long-standing U.S. export subsidy in time to avert a trade war with the European Union. But several are also seeking to use the repeal of the $5 billion-a-year subsidy as an opportunity to pass new corporate tax cuts worth much more. Most of those would be aimed at earnings from domestic manufacturing, but many new proposals would also shield billions of dollars in earnings from overseas operations. The debate over how to balance the bill's tax breaks between those for domestic and overseas sales has pitted companies including Boeing Co. and Caterpillar Inc. against Coca-Cola Co. and General Motors Corp. The deadline -- coupled with pent-up demand from businesses that felt slighted by the large tax cuts of 2001 and 2003, which were aimed mainly at individuals -- has sent corporate tax lobbyists into a frenzy. This is a godsend for lobbyists, one of them said yesterday. You wouldn't be a decent tax lobbyist if you didn't have tons of stuff in these bills. The House and Senate tax committees are still far apart, and there is no guarantee the corporate tax cuts will emerge from either chamber, much less reach President Bush's desk this year. But in recent weeks, senators and House members say they have made remarkable progress. The Senate Finance Committee overwhelmingly approved legislation this month that would cut corporate taxes by $100 billion over 10 years while eliminating $56 billion in export subsidies. The Senate measure is designed to cost the Treasury nothing, since it would scrap the export subsidies and raise additional revenue by curtailing abusive corporate tax shelters and closing tax loopholes. House Ways and Means Chairman Bill Thomas (R-Calif.) hopes to complete a bill this week or next that would reduce the Treasury's revenue by around $100 billion over 10 years, but lobbyists say the true cost could be considerably more than the $130 billion version Thomas drafted this summer. To advocates of the measures, Congress has no choice but to act. Two years ago, the World Trade Organization ruled illegal a U.S. tax provision that allows exporters to exclude 15 percent of their net export income from taxation. The WTO gave the European Union permission to impose $4 billion in trade sanctions on U.S. manufacturing and agricultural exports. The EU has given Congress until year's end to come into compliance. But after 37 months of declining payrolls in manufacturing, lawmakers are not about to slap what they see as a tax increase on the nation's most ailing economic sector. Jobs are important, said Ways and Means spokeswoman Christin Tinsworth. That's the focus of this. The Senate bill, co-authored by Senate Finance Committee Chairman Charles E. Grassley (R-Iowa) and the committee's ranking Democrat, Max Baucus (Mont.), would replace the export subsidy with a $60 billion tax cut for manufacturers that effectively lowers the tax rate on earnings from domestic manufactured goods to 32 percent from 35 percent. It also includes a dozen smaller measures, worth $39 billion, that would shield corporate overseas income from immediate taxation. Another provision would encourage U.S. companies to bring overseas profits back home by lowering the corporate income tax for one year to 5.25 percent, a measure that supporters say will bring a rush of fresh capital into the country but would also prove a boon to the firms who have lobbied hard for it, like Hewlett-Packard Co., Dell Inc., Eli Lilly and Co., and Merck Co. The provision would cost the Treasury $4.2 billion over 10 years. The Senate measure would extend specific tax breaks to lumber mills, oil refiners, cooperatives and even independent filmmakers. Thomas's bill would lower the corporate income tax rate to 32 percent for virtually all companies as well as speed up the rate manufacturers could write off new equipment, extend the length of time business losses could be written off future profits and weaken the alternative minimum tax, which was designed to ensure companies pay some income tax. But Thomas's political problems -- even among Republicans on the Ways and Means Committee -- stem from nearly two dozen provisions worth some $84 billion over 10 years that would aid multinational companies and protect overseas income. Thomas has said such measures would amount to a long-overdue reform of the nation's byzantine system of taxing overseas earnings, and most of them
tax breaks for astronauts redux
[ couldn't any tax break be considered 'anti-competitive'? ] HoustonChronicle.com -- http://www.HoustonChronicle.com | Section: Business March 14, 2003, 11:53PM Offshore tax issue about to flare Provision would help four area firms By KAREN MASTERSON Houston Chronicle Washington Bureau WASHINGTON -- Lawmakers will try again Tuesday to pass a bill granting soldiers and astronauts special tax relief, including a provision that would let four Houston-area companies and others continue to avoid U.S. taxes by using overseas addresses. The bill got yanked from the floor last week because of objections to special interest add-ons for a variety of businesses, including fishing tackle box makers -- located in Speaker Dennis Hastert's district in Illinois -- and horse tracks. House GOP leadership aides said those provisions were stripped to avoid another partisan debacle. But a provision eliminating so-called tax havens will remain. Democrats oppose the provision because it was written to benefit a select few companies that reincorporated to Bermuda or the Cayman Islands within the last year. Supporters of that provision expect Democrats to set aside their objections and support the underlying bipartisan bill that would give tax relief to military personnel and families of deceased astronauts, including the seven lost on the shuttle Columbia last month. Lawmakers hope to pass the tax relief bill before soldiers enter a war with Iraq. The so-called tax haven moratorium provision would temporarily end a corporate practice known as inversion, in which a business establishes a new name in a tax-free entity such as Bermuda or the Cayman Islands. The company then acquires itself while maintaining the same shareholders and operations in the United States, sidestepping corporate taxes on foreign income. A Senate version and a former House version had set the effective date to March 20, 2002. But that was changed in the House to March of this year, benefiting six companies that inverted to Bermuda or the Cayman Islands in the past year. They include electronics giant Cooper Industries of Houston and three area oil drilling companies: Noble Corp. of Sugar Land, and Nabors Industries and Weatherford International of Houston. House Majority Leader Tom DeLay attached the House version of the inversion moratorium provision to the Armed Forces Tax Fairness Act earlier this month. But his spokesman said the Sugar Land Republican played no part in determining the effective date. That date was pushed by local companies that hired former Houston Rep. Bill Archer to lobby on their behalf. Archer, a longtime chairman of the tax-writing House Ways and Means Committee, is a lobbyist for PricewaterhouseCoopers. He could not be reached Friday for comment. It was no secret that Congress was going to crack down on this loophole; these companies just thought they could get in under the wire -- or in this case, get out under the wire, said Dan Maffei, a spokesman for Democrats on the House Ways and Means Committee. Rep. Kevin Brady, R-The Woodlands, a member of that committee, said he does not support attempts to add the inversion measure to the larger, more popular tax relief bill. I'm hopeful that we can present a clean bill to the House, because the armed services tax relief bill is very important on its own, he said. Brady believes tax havens should be eliminated as part of a broader measure that gives corporations relief from what he calls anticompetitive U.S. taxes. He added that the inversion moratorium under consideration by the House should take effect this year, not retroactively. That view differs from Senate tax writers on the finance committee, who want to eliminate so-called tax havens for any companies that inverted after March 20, 2002 -- an effective date established when moratorium legislation was introduced last year. Senate Finance Committee Chairman Charles Grassley, R-Iowa, says making the law retroactive would rightfully punish those companies that went ahead and moved overseas, despite knowing that the law was about to change. Mr. Grassley has not been asked to change the date, nor does he have any plans to change the date, a spokeswoman for him, Jill Kozeny, said Friday. An earlier bill drafted by Rep. Richard Neal, D-Mass., would have removed the tax-free status on foreign income for companies that inverted anytime after the Sept. 11 attacks. His bill would also gradually apply to the dozen or so companies that reincorporated before Sept. 11, including Tyco, the electronics and telecommunication giant. Neal was particularly critical of House GOP leaders for trying to slip the weakened moratorium provision onto the armed forces tax relief bill: How ironic that yet another special-interest giveaway protecting a few who snuck out to avoid paying corporate taxes was lumped on a bill meant to provide moderate tax relief to our soldiers bravely serving America's interests abroad. Supporters of
tax breaks
[tackle box producers of the world, unite!] Military Tax Bill Pulled By Juliet Eilperin Washington Post Staff Writer Thursday, March 6, 2003; 4:53 PM House GOP leaders abruptly pulled a tax bill for military personnel from the floor today after fellow Republicans objected to a handful of parochial tax breaks the Ways and Means Committee had added to the measure. The bill was originally designed to give several tax breaks to members of the armed services, including reservists called to duty. House Democrats cried foul last week when several committee Republicans inserted other tax provisions that would benefit a few U.S. companies and trade associations. Republican House leaders had hoped to win passage of the bill today, but abandoned the effort when several GOP members balked. This bill over the period of the past couple of days got heavier and heavier, House Majority Leader Tom DeLay (R-Tex.) told reporters as he left the House chamber. We always want to make sure our members feel comfortable with bills that come to the floor. About two weeks ago, Ways and Means Committee Chairman Bill Thomas (R-Calif.) told Republican and Democratic members they could use the $482 million tax bill as a vehicle to add other tax provisions that had failed in previous efforts. Several Republicans responded with targeted items, including a repeal of the excise tax on fishing tackle boxes, a simplification of the excise tax on bows and arrows, and elimination of taxes imposed on foreigners who bet on U.S. horse races. House Minority Leader Steny Hoyer (D-Md.) said Republicans bore the blame for temporarily blocking the bill's progress. It's a darn shame that we got a partisan dispute that sent a message to our men and women in the service overseas that we couldn't get our act together because they larded up this bill with controversial provisions, Hoyer said in an interview.
once again, tax breaks are the solution
full article http://www.iht.com/IHT/TODAY/TUE/FIN/taibank.html Paris, Tuesday, October 10, 2000 Taipei Sets Tax Breaks For Banks That Merge Bloomberg News TAIPEI - Taiwan's banks will receive tax breaks if they merge, the island's new deputy prime minister said Monday as the government moved to revive stalled consolidation in the banking industry. The government has long pushed for lenders to merge to create stronger banks as part of a cleanup of the scandal-ridden finance industry. Deputy Prime Minister Lai In-jaw, appointed last week amid a shuffling of the island's four-month-old cabinet, said bank-reform efforts would be a top priority. ''Overbanking and vicious competition forced many banks to take on greater risks to compete in lending,'' Mr. Lai said in his first official news briefing. ''As a result, many banks suffer from problem loans. The Finance Ministry will generate measures such as tax breaks to encourage bank mergers.'' The government wants to see banks start merging six months after Parliament passes laws governing the status of financial holding companies to make combinations easier, Mr. Lai said. He did not give details on what measures were planned to promote consolidation. The Ministry of Finance tried last December to step up pressure on banks to merge, announcing that the state-owned Bank of Taiwan, Land Bank of Taiwan and Central Trust of China would combine. There has been little progress since then, and banks have been battered by scandals that have hurt confidence in Taiwan's financial sector. Moody's Investors Service Inc. has said that consolidation in banking ''could lead to greater financial-sector stability,'' though it also said ''rigid labor laws and political pressures'' could drain off much of the potential cost savings.
