Friday, October 8, 2004

House close to corporate tax-law overhaul



By Martin Crutsinger
The Associated Press

WASHINGTON - The House moved toward passage Thursday of the most sweeping rewrite of corporate tax law in nearly two decades, a measure designed to end a nasty trade war with Europe and $136 billion in new tax breaks on businesses, farmers and other groups.

Supporters argued that the centerpiece of the legislation - tax relief for American factories - was critically needed to aid beleaguered manufacturers who have suffered 2.7 million lost jobs over the past four years.

But opponents charged that the tax package had grown into a massive giveaway that will add to the complexity of the tax system and end up rewarding multinational companies that move jobs overseas.

"Instead of rewarding investment in America, this conference bill continues to encourage multinational companies to shift jobs overseas," Rep. Sherrod Brown, D-Ohio, said during the opening of House debate on the proposal.

House Ways and Means Chairman William Thomas, R-Calif., argued that the legislation was urgently needed to "end sanctions on U.S. products and provide tax relief to America's job creators."

The original purpose for the legislation was to repeal a $5 billion annual tax break provided to American exporters that was ruled illegal by the Geneva-based World Trade Organization and lift retaliatory tariffs that are now being imposed on more than 1,600 American manufactured products and farm goods exported to Europe.

However, the bill replaces the $49.2 billion export tax break with more than $135 billion in new tax breaks over the next decade for a wide array of groups from farmers, fishermen and bow and arrow hunters to some of America's largest corporations.

The major new tax break would provide $76.5 billion in relief over 10 years to manufacturers and other U.S. producers, broadly defined to include construction companies, architectural firms, film and music producers and the oil and gas industry.

Opponents argued that the oil and gas industry, which is enjoying record prices for their products, should not be included in a bill that was intended to encourage American manufacturers to keep their factories in the United States and not move them overseas. Another controversial section of the bill would provide $42.6 billion in tax relief to multinational companies, including providing a "tax holiday" that would lower for one year the tax rate on companies returning their overseas profits to the United States.

Supporters argued that this would boost the amount of capital available for investment in the United States while opponents charged it represented a windfall for companies that had already moved operations overseas.




BUSINESS HEADLINES
Tailored look gets back to work
Local forecast: Gloomy
Kroger, union report 'small steps' on contract
Oil reaches $53 per barrel
Why growth but few jobs? Fed official wonders, too
'Investors' want jail time for con man
Companies urged to use minority suppliers
Honda hybrid once again tops EPA fuel-sipper list
Tepid Sept. retail sales harbinger of Christmas?
Smoking foes slam payout
House close to corporate tax-law overhaul
Tristate summary
Business people
Business digest