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AIA Hails Grassley-Baucus Tax Reform Bill WASHINGTON, D.C., October 1-- A comprehensive international tax bill expected to pass the Senate Finance Committee today includes several provisions supported by the Aerospace Industries Association of America (AIA) that will enhance capital investment and job creation in the U.S. manufacturing economy. The Jumpstart Our Business Strength (JOBS) Act of 2003 (S. 1637), co-sponsored by Committee Chairman Charles Grassley (R-IA) and Ranking Minority Member Max Baucus (D-MT), reforms the current Foreign Sales Corporation/Extraterritorial Income (FSC/ETI) law, which provides U.S. manufacturers with a partial tax credit on export-generated revenue. S. 1637 expands this benefit to a broad-based top rate reduction of three percent for all domestic manufacturing firms. Senators Grassley and Baucus drafted the JOBS Act in response to the 2002 ruling of the World Trade Organization (WTO) that the FSC/ETI law constituted an illegal "subsidy to trade." This finding cleared the way for the European Union to impose up to four billion dollars in sanctions against American exports next year if the U.S. failed to adopt a legislative remedy that complies with the WTO's standards of market access. The Grassley-Baucus legislation meets these standards since it authorizes tax relief for all onshore producers rather than companies only in the export sector. "By developing a new international tax regime that preserves the ability of American companies to market their products abroad, the JOBS Act stimulates manufacturing employment and innovation at home," said John W. Douglass, AIA President and CEO. Douglass added that the need for a new tax framework consistent with the WTO charter remained critical for the aerospace industry as the nation's leading exporter. International sources buy approximately 40 percent of the total output of AIA member companies. The Finance Committee also re-affirmed its support for Internal Revenue Code Section 911 that exempts from taxation the first $80,000 of income earned by U.S. citizens who work overseas. Section 911 enhances the competitiveness of the aerospace industry and other American companies that depend on international customers and supply chains. In a September 25th letter to Senators Grassley and Baucus, Douglass appealed for the retention of Section 911, writing that no other developed country except the United States taxes any level of foreign-earned income. The letter also cited an independent study that estimated a loss of 150,000 U.S.-based jobs with the possible elimination of the Section 911 benefit. Congress must still reconcile different Senate and House versions of the FSC/ETI reform law by the end of the year. The House Ways And Means Committee will likely consider the issue within the next two to three weeks. Read AIA's letter to the Senators. P.A. Rel 2003-31 10.01.03 -AIA- Contact: Alexis Allen, AIA |
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