Key International Tax Measure May Be Dropped From House Bill

by Mike Godfrey, Tax-News.com, Washington

07 June 2004

It has been reported that the US House of Representative’s most senior tax writer may drop a key component of the corporate tax bill intended to overturn EU trade sanctions, in a move that will reduce the overall cost of the bill by around $10.5 billion.

According to a Dow Jones Newswire report, a top Republican House aide has revealed that House Ways and Means Committee Chairman Bill Thomas (R – Calif), intends to do away with proposed changes to the ‘Subpart F’ section of the international tax code allowing US firms to defer income tax on certain overseas gains.

Under Thomas’s proposal, US companies would be permitted to treat the European Union as a single country when applying the Subpart F tax rules in a measure designed to simplify procedure for American firms, and in the words of last November’s Ways and Means Committee report "compete on a more even basis against their foreign competitors."

The shelving of this proposal will save an estimated $10.47 billion over ten years. However, it is thought that opposition from certain House Republicans, notably Rep. Don Manzullo (R- Ill), was as much behind the decision to drop the changes as cost-cutting concerns.

The Committee is due to vote on the bill on June 10.

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