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ETI REPEAL CONFERENCE SHOWS PROGRESS
September 30, 2004
Evidence emerged yesterday that tax negotiators are serious about reaching a compromise on legislation to repeal the Extraterritorial Income Exclusion (ETI) before they adjourn for their re-election campaigns. The evidence is in the form of a "discussion draft" of compromise language for the bill released by House Ways and Means Chairman Bill Thomas. The draft language resolves a contentious point by embracing the Senate's approach to replacing the ETI exclusion with a manufacturing tax break.
The original House bill would have reduced tax rates for C corporations. The compromise approach allows a deduction that eventually reaches 9% for income from "production" activities. Production activities under the bill include manufacturing, farming, and architectural and engineering services. The compromise deduction is available for all qualifying taxpayers, not just for C corporations.
The biggest threat to the bill is an attempt to use it as a vehicle to extend FDA regulation to tobacco.
Link to New York Times coverage of bill.
Prior Tax Update coverage of ETI repeal:
WAYS AND MEANS APPROVES ETI REPEAL; QUICK HOUSE PASSAGE EXPECTED
JUST WHEN THE PARTY IS GETTING GOOD...
SENATE PASSES ETI REPEAL; LOTS OF OTHER STUFF INCLUDED
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