House Passes Pro-Tech Tax Breaks
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The U.S. House of Representatives passed a corporate tax bill Thursday afternoon loaded with provisions favorable to the technology industry, including a reduction in foreign revenue taxes and an extension of the research and development tax credit.
Other pro-tech provisions include limiting double-taxation of overseas earnings and protecting employee stock purchase plans and stock option incentives from payroll taxes.
The overall bill passed by the House on a 251-178 vote -- the American Jobs Creation Act of 2004 -- is aimed at addressing the sanctions that went into effect March 1, when the European Union (EU) began collecting a 5 percent penalty tariff on a wide variety of U.S. goods.
The measure now goes to a joint House-Senate conference committee to work out differences between the two bills.
Tech proponents say the foreign revenue tax break, which reduces the tax rate on foreign dividends from 35 percent to 5.25 percent for one year, will "repatriate" more than $300 billion into the U.S. economy and create as many as a half million new jobs.
Both Democratic and Republican critics of the provision say it rewards companies for shipping jobs overseas. In the final vote, 48 Democrats joined 203 Republicans in approving the legislation with only 23 Republicans voting against the bill.
"This vote represents an important victory for the American economy, consumers and businesses," Rhett Dawson, president of the Information Technology Industry Council, said in a statement. "The American Jobs Creation Act and the strong provisions it includes will boost job creation, spur economic growth and expansion, and help promote the global competitiveness of U.S. IT companies."
House Majority Leader Tom DeLay (R-Tex.) said the bill will create more jobs and opportunities for the Americans and support the United States' obligations to the World Trade Organization (WTO).
The EU sanctions followed a ruling last year by the WTO that called an annual $5 billion tax break given to U.S. exporters an illegal export subsidy. The WTO set a March 1 deadline for Washington to change its tax code or be penalized. The penalty increases by 1 percent per month over the next year
The House and Senate fix is to alter portions of the corporate tax code in order to satisfy the WTO and redistribute the tax breaks.
"This bill will keep American jobs in America," DeLay said in a statement. "It will encourage companies to manufacture more goods and keep more jobs in the United States while maintaining the global competitiveness of the American economy."
Majority Whip Roy Blount of Missouri said during the floor debate that "American companies and workers are at a competitive disadvantage." After the vote, he issued a statement that said, "Reducing taxes on businesses of all sizes and eliminating these unfair penalties will help American manufacturers and farmers invest more in expanding operations and creating new jobs."