House Committee Approves Thomas Corporate Tax Cut Bill

by Mike Godfrey, Tax-News.com, Washington

30 October 2003

The House Ways and Means Committee has approved a bill put together by Committee chairman Bill Thomas this week, although there remains considerable doubt as to whether the Senate will approve a measure that will cost $60 billion over the next ten years.

The bill, which would effectively replace the Extra Territorial Income Exclusion Act ruled illegal by the WTO, will cut corporate tax to 32% (from 35%) by 2007 for US manufacturers. It also includes tax cuts for smaller firms along with a host of other tax breaks for business. However, there are concerns that the bill favors multinational firms at the expense of domestic producers, and eleven Republicans have pledged to oppose the bill on the grounds that it “will send more American jobs overseas”, according to the Wall Street Journal.

Republicans are now expected to canvass members to establish how much support exists for the Thomas bill before the measures go before a full House vote.

Meanwhile, the threat of EU sanctions draws ever closer and a decision on what action will be taken by Europe is anticipated next month. According to reports, it is thought that the EU will choose to apply tariffs in increments, starting at 5% on a wide variety of US goods from March. This will increase by 1% per month until the tariffs hit 17%, which will cost US exporters around $700 million in the first year.

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