Senate Passes International Tax Reform Legislation

On May 11, 2004, by a vote of 92 to 5, the Senate passed the Jumpstart Our Business Strength (JOBS) Bill (S. 1637). Although the primary purpose of the legislation is to repeal the extraterritorial income (ETI) provisions of the Code that had been declared an illegal trade subsidy by the World Trade Organization, and end the imposition of trade sanctions by the European Union, the focus of the legislation has become how best to replace ETI with other tax breaks for U.S. business. The legislation includes over 250 provisions, including: a package of international tax reform and simplification provisions; a package of domestic manufacturing and business provisions; a package designed to curtail tax shelters and address Enron-related, expatriation and other corporate governance issues; a package extending various expiring provisions; a package of energy tax incentives pulled from the Senate’s energy bill; and a package of additional revenue raising provisions, beyond ETI repeal and tax shelter abuse, to pay for the legislation. The House has yet to pass its version of the legislation, with two primary competing proposals that have not been able to attract majority support. It is not clear how quickly the House will be able to pass a version of the legislation. House action, when it comes, is likely to be followed by a difficult conference committee.


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