Key Measures Added To House Corporate Tax Bill

by Mike Godfrey, Tax-News.com, Washington

08 June 2004

Chairman of the House Ways and Means Committee, Bill Thomas, on Friday released a revised version of his $34 billion corporate tax bill which contains some new measures in an attempt to drum up cross-party support.

A key measure that has made it on to the new version of the American Jobs Creation Act of 2004, which goes to a Committee vote on Thursday, is a temporary reduction in corporate income tax for earnings repatriated from foreign sources to 5.25%, down from 35%, for a period of one year, provided the income remains in the US during that time.

According to Thomas, fifteen of the sixteen reforms in his proposals are identical to provisions in the recently passed Senate ‘JOBS’ bill, including: a 3% reduction in the top corporate tax rate from 35% to 32%; $4 billion in Alternative Minimum Tax relief; enhanced section 179 expensing for 2 years, making it easier for small businesses to invest in new equipment and grow their businesses; 11 tax relief and simplification provisions for S Corporations; an easing of qualification rules under Subchapter S; provisions to prevent broad-based stock options becoming subject to payroll taxes; and rules allowing taxpayers to deduct either state income tax or sales tax (whichever is greater) for 2004 and 2005.

The bill also contains 13 further measures aimed at helping small firms, manufacturers and farmers.

Commenting on the bill, whose primary intent is to repeal FSC-ETI legislation in order to bring an end to WTO-approved EU trade sanctions, Thomas said the measures "will also provide tax relief to US manufacturers to help create more American jobs and help US-based businesses succeed in the worldwide market while building jobs at home".

However, the Thomas bill still faces some opposition from fellow Republicans, mainly in the form of Rep Don Manzullo (R – Ill), Chairman of the House Small Business Committee and sponsor of a rival bill, who has criticized the legislation for not doing enough to help small firms.

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