Democrats Close To Agreement On Corporate Tax Bill

by Mike Godfrey, Tax-News.com, Washington

08 July 2004

Senate Minority Leader Tom Daschle indicated on Tuesday that the Democratic Party is close to reaching an agreement concerning the corporate tax bill that will replace subsidies under current ETI-FSC legislation which have been banned by the World Trade Organisation.

Speaking to reporters, the South Dakota Democrat revealed that “some good conversations” have taken place with Senate Majority Leader Bill Frist (R – Tenn) concerning the legislation. "I'm very optimistic about our conferees on the FISC bill," Daschle stated.

The current talks are the first stage of formally convening negotiations towards a final version of the bill.

The House and Senate, which have both passed similar versions of the legislation need to arrive at a compromise in a process that is likely to drag on for some time as lawmakers iron out their differences relating to the bill's many provsions.

Charles Grassley, the Chairman of the Senate Finance Committee believes that the legislative process is unlikely to be completed before the August Congressional recess.

Meanwhile, EU-imposed tariffs on American goods continue to mount up. First levied in March at a rate of 5%, the tax on US imports will continue to increase at a rate of 1% per month until it reaches a ceiling of 17%.

The major component of the tax bill is a 3% reduction in corporate tax for certain US firms to compensate for the loss of FSC-ETI subsides.

Both the House and Senate versions also include a multitude of other fiscal measures, ranging from a proposal to reduce income tax on repatriated foreign earnings for one year, to tax breaks for bow and arrow makers.

Needless to say, legislators have expressed vastly differing opinions over many of the proposals.

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