House Considers Tax Break For Businesses

House Ways and Means Committee Chairman Bill Thomas (R-CA) has introduced a bill that would provide at least $120 billion in tax relief for businesses over the next 10 years.

Congress is under pressure from the World Trade Organization to discontinue a U.S. export credit that provides a subsidy to U.S. manufacturers who sell their goods abroad. Finding a means to replace the advantages provided by the export credit is the impetus for the proposed business tax relief legislation.

Representative Thomas's bill, H.R. 2896, would reduce the top brackets of corporate income tax to 32% for businesses with taxable income of less than $10 million, it would provide relief from alternative minimum tax, it would extend the loss carryback period, and it would provide a temporary reduction from income for overseas earnings. The bill would also replace the current nine foreign tax credit categories with two categories, and shorten the depreciation period for equipment from 10 years to seven years.

"This bill focuses in a significant way on domestic manufacturers and their workers," said Rep. Thomas.

Analysts suggest that neither the House nor the Senate will accept the bill as it is proposed, but some of the provisions are likely to become law. Were the export subsidy to remain in effect, it would provide $50 billion in relief over the next 10 years. An article in yesterday's Wall Street Journal suggests that a comparable amount of business tax relief is a reasonable expectation from this legislation. ["Corporate Tax Cuts Proposed in Place of Export Credit," The Wall Street Journal, July 28, 2003]

Earlier this year, the World Trade Organization gave the European Union the go-ahead to impose sanctions should the United States fail to repeal the export credit. The U.S. faces a potential $4 billion in sanctions from the EU if the export credit is not repealed by October 1.

You may like these other stories...

School tax breaks get House support as Democrats objectRichard Rubin of Bloomberg reported that the House of Representatives on Thursday voted to expand and simplify tax breaks for education as Republicans continue to pass...
Many senior US tax professionals believe that a streamlined audit process will be the top benefit resulting from the IRS Transfer Pricing Audit Roadmap, a new toolkit organized around a notional 24-month audit timeline,...
Tax accounting to be simplified for money-market fundsThe US Securities and Exchange Commission (SEC) voted 3-2 on Wednesday for sweeping changes to institutional money-market funds, Emily Chasan, senior editor of...

Upcoming CPE Webinars

Jul 31
In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.
Aug 20
In this session we'll review best practices for how to generate interest in your firm’s services.
Aug 21
Meet budgets and client expectations using project management skills geared toward the unique challenges faced by CPAs. Kristen Rampe will share how knowing the keys to structuring and executing a successful project can make the difference between success and repeated failures.