- The Washington Times - Monday, June 14, 2004

House lawmakers yesterday moved toward approving a bill that would end an illegal export subsidy and create billions of dollars in new corporate-tax breaks.

The House Ways and Means Committee by press time yesterday had not voted on the approximately $150 billion measure.

“Ending sanctions, reducing taxes and encouraging business investment will help generate continued American job growth,” said Rep. Bill Thomas, California Republican and committee chairman.

Despite the need to repeal sanctions, Republicans and Democrats fought bitterly over the bill and the numerous tax breaks written into it.

The World Trade Organization in 2002 ruled against a section of the U.S. tax code meant to help exporters by offering tax breaks on overseas sales. The ruling, which called the incentives illegal subsidies, allowed the 25-nation European Union to punish U.S. exporters.

Retaliation began March 1. Each month, the trade bloc has increased its sanctions, squeezing exporters of paper, apparel, jewelry, toys and more than 1,000 other American products.

The House bill, sponsored by Mr. Thomas, would roll back the export subsidy, worth $50 billion over 10 years. Those funds would be reapportioned, and new breaks added, to create a tax cut for manufacturers, multinational corporations and a variety of special interest groups.

“I want this bill to reach the floor as fast as possible because it stinks to high heaven in terms of what we came here to do and the fertilizer [Mr. Thomas] has put on this,” said Rep. Charles Rangel, New York Democrat.

The Senate in May by a wide majority approved its own version of the corporate tax bill. The separate measures would have to be reconciled in a House-Senate conference, which is likely to be a difficult negotiation.

Both measures offer the broad manufacturing and multinational cuts, but also include a series of narrowly written measures to help specific firms or industries.

The Senate’s $170 billion bill would help energy companies, cruise lines, archery-product makers, dog-racing tracks, Oldsmobile dealers, railroads, shipbuilders, Hollywood, an Iowa hotel and NASCAR.

The House version largely matches the Senate bill, though it leaves out the sizable energy package and adds some new breaks, such as taxpayer deductions on local sales tax and assistance for tobacco farmers. The House version does not tighten some tax rules that the Senate used to raise revenue.

“This bill is solely stacked to get enough votes so that [lawmakers] can squish this pig out Capitol Hill doors,” said Keith Ashdown, vice president of Taxpayers for Common Sense, a budget watchdog group.

Mr. Ashdown’s group has been critical of both the House and Senate versions of the bill, saying they are cobbled together to win votes from a majority of legislators and are based largely on requests from lobbyists.

“If you are a lobbyist and your paymaster doesn’t have anything in this bill, you should get fired,” Mr. Ashdown said.

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