With time running out to eliminate an export tax the World Trade Organization has called "illegal," Congress is considering two bills that would eliminate the cut by the year’s end deadline and make up the difference through tax cuts to the manufacturing sector.
Charles Grassley (R-IA), chair of the Senate Finance Committee, introduced a bill last week that would immediately cut tax rates for domestic manufacturers and phase in all others by 2013. The reduction would save domestic manufacturers $50 billion over 10 years.
"U.S. businesses are under more pressure than ever in an era of expanding global markets," said Grassley. His comments were reported by the Associated Press. "This bill will increase the ability of U.S.-based operations to compete with foreign competition abroad and on U.S. soil."
The House is considering similar legislation, with 145 representatives backing a manufacturing tax cut that would cut the top rate by 10 percent, from 35 percent to 31.5 percent. Like the Senate bill, the House gives the most benefits to the companies that produce the majority of their products in the United States.
Reps. Philip Crane, (R-IL), and Charles Rangel (D-NY), told the AP that the Senate took its cue from the House bill. "Their bill is written along the same lines as our bill," they said. "It's clear a bipartisan, bicameral consensus has emerged to focus tax benefits on U.S. manufacturing."
Both bills would also ensure that the proposed tax cuts negate the impact of eliminating the export tax by having a zero effect on the Treasury.