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US corporate tax bill clears Senate hurdle
On May 11 - the US Senate cleared the way for passage of a corporate tax bill that would repeal US export subsidies found to violate global trade rules and cut taxes for manufacturers.The Senate voted 90-8 to limit debate on the bill that includes some $170 billion in new tax breaks for US businesses over the next decade.
As part of an agreement to limit debate, Republican leaders allowed minority Democrats to offer an amendment that would extend jobless payments for unemployed workers who exhaust their normal benefits. The measure was killed in a procedural vote.
Senators were expected to consider several other amendments on the bill’s substance including a proposal by Sen. John McCain, an Arizona Republican, that would strike some $14 billion in energy tax provisions from the bill.
Senate Finance Committee Chairman Charles Grassley, an Iowa Republican, said he thought the energy provisions would survive McCain’s efforts and that the bill would win overwhelming Senate approval. He said that should help win passage in the House of Representatives.
“The outlook in the House is helped by passage of this legislation in the Senate,” Grassley said.
The legislation would repeal tax subsidies for US exporters that the World Trade Organization said violate international trade rules. The European Union in March began imposing punitive import tariffs on U.S. goods. The tariffs started at 5 percent and now stand at 7 percent and will continue to rise every month until the export tax breaks are repealed.
The Senate bill would use the $50 billion saved by repealing the export subsidies to cut income taxes for US manufacturers. The bill includes billions of dollars in other tax breaks for businesses and has been described by Taxpayers for Common Sense, a public interest group, as being riddled with tax pork.
It includes a tax holiday for US multinational companies to bring overseas earnings back to the United States at a 5.25% tax rate instead of the 35% corporate rate.
The Senate bill would cover the cost of new business tax breaks by closing tax shelters and raising other revenues.
“We are closing a lot of loopholes,” said Sen. Max Baucus of Montana, the top Democrat on the Finance Committee
The bill also includes a provision, approved by the Senate last week, that would block changes in overtime rules for white-collar workers that opponents say would deny millions of workers the right to overtime pay.
The US House of Representatives is considering separate legislation to comply with the WTO ruling. That bill includes a number of tax breaks for US multinational companies, but election-year worries about trade and American job losses due to companies shifting operations overseas has slowed its progress. (Reuters)
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