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Overview of the 2004 Corporate Tax Proposals: Revenue Effects, December 20, 2004 1 (December 20, 2004)

handle is hein.tera/crstax0030 and id is 1 raw text is: Order Code RS21885 Updated December 20, 2004 CRS Report for Congress Received through the CRS Web Overview of the 2004 Corporate Tax Provisions: Revenue Effects Jane G. Gravelle Senior Specialist in Economic Policy Government and Finance Division Summary The corporate tax revisions that repealed the extraterritorial income tax (ETI) and adopted a domestic tax reduction for manufacturing ( H.R. 4520) contained permanent provisions that gained revenue in some cases and lost it in other cases. The bills also contained some temporary revenue losers. The most important of the permanent revenue gain provisions were the ETI repeal itself and some tax shelter provisions; the most important provisions that lost revenue were the manufacturing subsidies and the provisions reducing tax on foreign source income. There were also a number of temporary provisions that lost revenue, and a temporary optional itemized deduction for state and local sales taxes in lieu of state income taxes. This report summarizes the revenue effects of the House, Senate, and conference versions. This report will not be updated. Legislation in response to the World Trade Organization's finding that the extraterritorial income tax (ETI) provision in the U.S. tax code contravenes rules prohibiting export subsidies led to omnibus legislation.' In the Senate, S. 1637, the Jumpstart Our Business Strength (JOBS) Act contained about 250 separate provisions, but was relatively revenue neutral, losing $14.5 billion over the first five years and gaining $2.9 billion over the first 10 years. In the House, H.R. 4520, the American Jobs Creation Act, would lose $32.2 billion over the first six years and $35.3 billion over the first 11 years, although $9.5 billion of those amounts involved an expenditure for revision of the tobacco markets. The final conference version (H.R. 4520) cost $8.7 billion over the first five years (2005-2009) and was revenue neutral over ten years. The tobacco market revision was redesigned to pay for the expenditure with an assessment on tobacco companies, and this report does not contain information on the tobacco market revision.2 For background, see CRS Report RS20746, Export Tax Benefits and the WTO. The Extraterritorial Income Exclusion and Foreign Sales Corporations, by David Brumbaugh. 2 See CRS Report RL31790, Tobacco Quota Buyout Proposals in the 108'h Congress, by Jasper (continued...) Congressional Research Service ** The Library of Congress

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