Number: RL32066
Title: Taxes, Exports, and Investment: ETI/FSC and Domestic Investment Proposals in the 108th Congress
Authors: David L. Brumbaugh, Government and Finance Division 
Abstract: The focus of this report is a set of proposed tax bills in the 108th Congress that could have potentially important effects on international income and investment. Congressional deliberations on the legislation culminated in October, 2004, with passage of the American Jobs Creation Act (H.R. 4520; Public Law 108-357). The bills considered by Congress included S. 1637, a measure passed by the Senate in May 2004, and H.R. 4520, a bill approved by the House on June 17. Other proposals included H.R. 1769/S. 970 (the Crane/Rangel/Hollings proposal); H.R. 2896 (an earlier version of H.R. 4520 that was approved by the Ways and Means Committee); and a number of other bills introduced in the Senate, including S. 1475 (Senator Hatch), S. 1688 (Senator Rockefeller), S. 1922 (Senators Smith and Breaux), and S. 1964 (Senators Stabenow and Graham). Each of the plans proposed to phase out the U.S. extraterritorial income (ETI) tax benefit for exports that has been the center of a dispute between the United States and the European Union (EU). Each bill also proposed new investment tax benefits not related to exporting that differ from bill-to-bill and that have been the subject of debate. For its part, the Administration stated it supports both repeal of ETI and the development of alternative tax provisions that would increase the competitiveness of American manufacturers and other job creating sectors of the U.S. economy. While its FY2005 budget proposal outlined several possible alternative tax benefits deserving consideration, it did not include either repeal of ETI or include specific alternative benefits in the budget.
Pages: 17
Date: November 5, 2004