Grassley Wades Into The US Export Tax Debate

by Mike Godfrey, Tax-News.com, Washington

18 September 2003

Charles Grassley, Chairman of the Senate Finance Committee, said this week that he is drafting his own version of a tax bill to replace America's banned export subsidy system, which he claims will contain big tax cuts for US manufacturers and exporters.

The Iowa Republican is currently piecing together a bill that is expected to use the $50 billion freed up by the repeal of the Extraterritorial Income Exclusion Act over the coming decade to provide tax cuts for many US corporations. It is also anticipated that the bill will contain some amendments to international taxation law, although it is thought that any additional costs arising from these changes will be offset by the closure of tax loopholes and other revenue raising measures.

Grassley's bill will be cast into the fray alongside two other competing proposals from House Ways and Means Committee Chairman Bill Thomas and Representatives Phil Crane (R - Ill), Charles Rangel (D - NY) and Dan Manzullo (R - Ill). The Thomas bill has the support of 35 CEOs from major US exporting companies, but would cost an additional $130 billion over ten years. The other bill, however, would cut corporate tax to 31.5% and would be effectively revenue neutral.

Meanwhile, Senator Olympia J. Snowe (R - Maine) has written to Grassley reminding him not to forget about America's small firms, and has urged the Senate Finance Committee Chairman to include provisions for so-called 'S-class' businesses within his forthcoming bill.

"While an across-the-board rate cut for domestic taxable corporations that manufacture goods in this country is an appropriate step, it does little for the small firms and exporters that are struggling to compete in a global economy," Snowe said told US Newswire. "It simply is imperative that this legislation provides them with tax relief comparable to C-corporations."

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