Snow Urges Congress To Trim Special Interest Tax Breaks From Tax Bill

by Mike Godfrey, Tax-News.com, Washington

06 October 2004

US Treasury Secretary John Snow is urging Congress to strip the special interest tax provisions weighing down the corporate tax bill intended to overturn EU tariffs.

In a letter to House Ways and Means Chairman Bill Thomas (R-Ca), Snow noted that both the House and Senate versions of the bill “include a myriad of special interest tax provisions that benefit few taxpayers and increase the complexity of the tax code."

The letter went on to state that the administration intends to work with the Congressional conferees to “eliminate these narrowly crafted provisions."

The central aim of the new bill is to lift EU tariffs by repealing illegitimate subsidies provided under foreign service corporation legislation and the Extra-Territorial Income Exclusion Act, replacing the lost benefits with a corporate tax cut for certain US firms.

However, many lawmakers have seized upon the opportunity to load the bill with a variety of unrelated and obscure tax provisions that include tax breaks for manufacturers of bows and arrows, fishing tackle and small refineries, among many others.

Snow’s letter also questioned a proposal to allow multinationals to repatriate overseas profits for one year at a much reduced income tax rate of 5.25%, which he said may put wholly domestic producers at a disadvantage.

"US companies that do not have foreign operations and have already paid their full and fair share of tax will not be able to benefit from this provision," said the letter.

Snow believes the $3 billion cost of this tax holiday would be better spent on reducing the tax burden on domestic firms.

House and Senate negotiators have until Friday to agree a final draft of the bill before Congress goes into an electoral recess.

Recommended