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About Oregon daily emerald. (Eugene, Or.) 1920-2012 | View Entire Issue (Oct. 29, 2003)
Nation & World News Committee passes corporate tax cut The measure, approved by a 24-15 margin along rigid party lines, is intended to create and maintain jobs By Sumana Chatterjee Knight Ridder Newspapers (KRT) WASHINGTON — Republicans on the House tax-writing committee vot ed Tuesday to give big multinational corporations tax cuts totaling $128 billion over 10 years, overcoming De mocratic opposition. The measure is intended to avert a trade war with the European Union over illegal subsidies for U.S. ex porters, but the bill is also laden with special favors for domestic manufacturers. The House Ways and Means Com mittee voted 24-15 along party lines to make it easier for multinational firms to claim tax deductions for in terest and credits for taxes they pay to foreign governments. The legislation also would cut the top tax rate for most U.S. businesses from 35 percent to 32 percent by 2012. Small busi nesses with less than $20 million in annual taxable revenue would also get an across-the-board tax cut to 32 per cent by 2012, but their cut would be phased in depending upon each firm's taxable revenue. Supporters of the legislation said the tax breaks would make American companies more competitive in the global economy and ultimately help them create and keep jobs in the Unit ed States. The U .S. Chamber of Com merce, National Association of Man ufacturers and other business lobbies backed tire legislation. Critics, including some Republi cans from areas hit hard by the manu facturing slump, worried that the measure would help companies send jobs overseas. The legislation would lower "the cost of doing business overseas for American companies. This will neces sarily encourage American companies to move American jobs offshore to China and other locations," wrote Rep. Donald Manzullo, R-Ill., in a let ter signed by 10 other Republicans. Manzullo is chairman of the House Small Business Committee. The Senate is working on its version of corporate tax cut legislation. With only weeks before this year's session of Congress ends, it is unlikely that the tax cuts will be enacted before next year. Republican leaders pushed the bill partly to signal to the European Union that the United States intends to bring the U.S. tax code into compliance with international trade rules. The European Union has threatened to levy $4 billion in punitive tariffs if Congress doesn't re peal certain export tax breaks by year's end. The World Trade Organization, which monitors ground rules for inter national trade said $5 billion in annual U.S. tax breaks for American exporters are illegal. Ways and Means tax writers stripped out many of the illegal breaks while adding tax benefits to the same U.S.-based multinationals so they would not suffer a competitive disadvantage, Republican aides said. They also eliminated some corporate tax shelters and included language to crack down on companies that move abroad to avoid paying U.S. taxes. To broaden support, the tax writers also sought to speed along the tax cut for some domestic companies that makegoods manufactured, produced, grown or extracted in the United States. That includes oil and gas com panies and movie studios that spend at least 50 percent of film production expenses in America. For them, the 35 percent top corporate tax rate would drop to 34 percent next year, then to 32 percent in 2007. "We started off with a $4 billion problem and you guys made it a $128 billion problem." Rep. Charles Rangel D-N.Y. "We started off with a $4 billion problem and you guys made it a $ 128 billion problem," said Rep. Charles Rangel of New York, the top Democ rat on the committee. Republicans said the legislation would protect the companies that ben efited from the tax breaks that raised the European Union's ire. "We can't just re peal those portions of the laws. We need to make the international benefi ciaries as whole as possible," said Rep. Nancy Johnson, R-Conn. Many of the more expensive new tax provisions would not go into ef fect until after 2006. The potential impart of the new tax cuts on the federal budget deficit alarmed many lawmakers, who argued that the House of Representatives should follow the Senate's lead by pass ing a revenue-neutral package that would not increase the national debt. The House tax package on balance would add $60 billion to the deficit, which is already projected to exceed $500 billion in the current fiscal year. "We are now facing very alarming deficits and passing enormous tax breaks for corporations that create big problems for your children," said Rep. Earl Pomeroy, D-N.D. (c) 2003, Knight Ridder/Tribune Information Services. CAMPUS Efc UP 2! 2! Thursday EMU Craft Center lonely pot sale, 10 a.m.4 p.m., EMU Craft Center. Featured items will be ceram ics and other pottery. Germanic languages lecture, 4 p.m.-5:20 p.m., EMU Gumwood Room. Jack Zipes, internationally renowned scholar of fairy tales and folklore, will speak. W"\ Halloween HQ's for Authentic Costumes Flight Suits © Fireman Suits© Cooks Outfits Soldier Uniforms© Nurses Uniforms Camouflage Face Paint © Patches & Ensignes Toxicological Suits © Hard Hats ©Army Berets ACTION 4251 Franklin Blvd. SURPLUS Eugene 746.1301 HP* SURCHARGE continued from page 1 The poll confirmed that Democrats most strongly favored the surcharge, with 46 percent in favor and 40 per cent against. Republicans overwhelm ingly opposed the tax hike with 69 percent against it and 11 percent in support. Independents were more evenly split with 43 percent saying they would vote yes and 39 percent saying no. Taxpayer Defense Fund campaign manager Angela Wilhelms said she wasn't surprised by the poll numbers, adding that her organization is "en couraged by them." The Taxpayers Defense Fund is one of the groups be hind the petition to bring the tax sur charge to a state vote. “There's been a groundswell of sup port for the referendum," Wilhelms said. "But it's not shocking to see how much support there is." Wilhelms said higher taxes would n't help the state out of a recession and would drive businesses and oth er revenue sources out of the state. She said the referendum would allow Oregonians a chance to vote on an important issue. "1 would encourage people regard less how they feel about the tax in crease to support the concept (of the referendum) to go in front of people" Wilhelms said. "This is exactly what democracy is made of." Bob Lawrence — spokesman for the Our Oregon Coalition, which is supportive of the surcharge — said the organization was actually "some what encouraged" by the poll num bers because the opposition to the tax surcharge was less than 50 percent. "We're not under any illusion that ... this is any slam dunk for us, but we're confident that we can get our word out to people and that people understand what is at stake here," Lawrence said. Lawrence said the coalition was currently working on a "grassroots campaign" and talking to groups that would be the most affected by the re jection of a balanced budget. He said the organization has been in touch with groups on all of the major cam puses around the state. "Most college students know what the hits on higher education are like," Lawrence said. "More budget cuts mean a bigger impart on college stu dents." The tax surcharge will probably re quire the average Oregon family to pay about an additional $88 in state taxes each year, according to the leg islative Revenue Office. Ihe surcharge would apply to the 2003, 2004 and probably the 2005 tax years. Contact the city/state politics reporter at shoikeda@dailyemerald.com. 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