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To: Tommaso who wrote (262346)	10/1/2003 4:43:12 PM
From: Haim R. Branisteanu	Read Replies (1) \| Respond to of 436258

DO NOT RUSH - Bill to Cut Manufacturers' Tax Rates Set By THE ASSOCIATED PRESS Published: October 1, 2003 Filed at 4:22 p.m. ET WASHINGTON (AP) -- Extending a helping hand to struggling manufacturers, a Senate committee on Wednesday drafted a bill that would lower tax rates for U.S. producers despite White House objections that the measure favors manufacturers over other companies. The Senate Finance Committee, which expects to give the bill final approval as soon as Wednesday, drafted the new tax rate structure as a replacement to a $5 billion annual tax break for exporters declared illegal in international courts. The United States could face up to $4 billion in sanctions from the European Union next year if the tax break isn't eliminated. Advertisement The bill gradually lowers the corporate tax rate to 32 percent for manufacturers who produce their goods in the United States. By the end of the decade, more multinational corporations can take advantage of the lower rates. Senators said the country's manufacturers desperately need the help. ``We cannot afford to let this job loss continue,'' said Sen. Max Baucus, D-Mont. ``We need to do something for the manufacturing sector.'' Two Republicans attempted to steer the bill toward reducing corporate tax rates for all businesses, including service and retail companies, and found an ally in the Treasury Department. Treasury Assistant Secretary Pam Olson said splitting the rate system for different corporations will create headaches for the IRS and for taxpayers. ``It does favor one sector over another, which would have the effect of distorting investment decisions,'' she said. Sen. Charles Grassley, R-Iowa, fired back that the issue forcing the committee to consider a corporate tax bill -- the illegal $5 billion tax break known as FSC, for ``foreign sales corporations'' -- has favored manufacturing over other sectors for decades. ``It's so ludicrous you'd take the position that we're favoring one over another. What do you think FSC has been doing for three decades? And what do you think the administration did on steel when they put tariffs on?'' said Grassley, the finance committee chairman. Grassley said Olson's statements during the committee debate were the first words of opposition he'd heard from the administration. ``I have been working on (the issue) for 12 months and I don't recall a single statement from anyone in the administration on the exact way to do anything,'' he told reporters. In a parallel effort to boost job creation at home, the bill allows companies with profits accruing abroad to bring the money back into the United States for one year at a 5.25 percent tax rate. Sen. Gordon Smith, R-Ore., said J.P. Morgan has estimated the influx of money and investment could create as many as 500,000 jobs. Some senators questioned whether the bill should reward companies that don't routinely reinvest in the United States. Olson said the Bush administration also questioned the fairness of the tax holiday. The committee voted 11-10 to reject a proposal by Sen. John Breaux, D-La., to make sure companies spend the money on job-creation activities. ``The money's been made. The question is, what do you want to do with it?'' said Sen. Rick Santorum, R-Pa. ``Do you want to leave it there, or do you want to bring it back and create jobs?'' The bill expands the realm of businesses that can call themselves manufacturers to include oil and gas industries and softwood lumber producers. Other portions of the bill streamline rules for multinational corporations with operations overseas by changing the system of foreign tax credits and the treatment of interest. The bill balances tax breaks for corporations with items that will bring more revenue into the Treasury. Lawmakers expect to raise nearly $15 billion by closing corporate tax shelters. It also extends customs fees for another decade. Lawmakers also added language allowing the Internal Revenue Service to hire bill collectors to help them recoup unpaid taxes.