Brushing aside Treasury concerns, House taxwriters last night approved their bill to repeal the Extraterritorial Income Exclusion (ETI). The bill would repeal the ETI and provide a lower tax rate for C corporation manufacturing income.
The bill is also freighted with a large number of provisions that appear, at least to the untrained eye, to be unrelated to international trade. These include a $10 billion program for tobacco growers and a repeal of an excise tax on tackle boxes.
The bill is considered a "must-pass" piece of legislation because trade sanctions imposed by the World Trade Organization will remain in effect until the ETI is repealed.
UNUSUAL TASTE IN FRAGRANCES
Ranking Ways and Means Committee Democrat Charles Rangel says the bill is a piece of stinky business. Quoth Tax Analysts: "I want the bill to reach the floor as soon as possible because it stinks to high heaven."
Chairman Bill Thomas apparently thinks the bill smells ok: "This bill minimizes double taxation and simplifies complex international tax law. By doing so it levels the playing field for American businesses competing in a worldwide economy and encourages them to keep jobs in the United States."
Whatever the fragrance, the bill is expected to pass the House quickly. It will then have to be reconciled in conference with the ETI repeal already passed by the Senate. As the Senate bill is very different, the conference may be difficult.
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Joe Kristan writes the Tax Update items, and any opinions expressed or implied are not necessarily shared by anyone else at Roth & Company, P.C. Address questions or comments on Tax Updates to