GOP Turns To Offshore Taxes In Bid To Save Embattled Add-Ons

For Immediate Release:

March 6, 2003

Contact:Mark Wegner

CongressDaily

     House Republicans were shoring up their floor strategy late Wednesday for what Democrats promised would be a spirited debate today on a military tax relief bill that contains a number of unrelated special interest tax breaks. According to GOP aides, Republicans will not strip out the special interest provisions, but are including a self-executing rule that would impose a moratorium on so-called corporate inversions until December 2004 to help pay for the add-ons.
     The Rules Committee late Wednesday approved a rule for debate that also would deny Democrats the right to offer a substitute and would solidify GOP support for the bill by making sure the add-ons are offset by revenue raisers. "All of the add-ons are in there. What we're going to do is make sure it's paid for," one aide said. The rule allows Democrats the opportunity to offer a motion to recommit. Democrats said that they are likely to offer a version of the same bill that passed the Senate Finance Committee but which did not have the add-ons.
     The GOP aide said Republican leaders worried that Democrats would seek to strip out all of the extraneous provisions and would seek to attach a permanent and retroactive ban against corporations that move offshore to avoid paying U.S. taxes. Democrats have complained Republicans loaded up an otherwise worthy bill to conceal a host of unrelated and parochial tax breaks.
     The "Armed Forces Tax Fairness Act," which alone costs $478 million over 10 years, would amend the tax code to allow U.S. military families to take full advantage of existing capital gains exclusions on the sale of a principal residence and by restoring the tax-exempt status of death gratuity payments.
     Democrats attacked a number of provisions including a break for tackle box manufacturers and foreign gamblers who bet on U.S. horse tracks.
     "It is an insult to our servicemen and women for Republicans to use this bill as a piggybank for their special interests," declared House Minority Whip Hoyer. "I think at a time when our first responders, our schools and our seniors are suffering from unprecedented budget cuts [that] millions of dollars in a tax break for tackle boxes is shameful."
     Republican leaders whipped the bill this week and believe the bill could pass with GOP votes if the add-ons are revenue neutral. House Majority Leader DeLay described the unrelated tax breaks as "corrections" to the tax code that have been waiting for a vehicle.
     "It's part of the legislative process," DeLay said. "You take things that are important to you and you put them on trains that will hopefully arrive at the White House."
     The cost of the add-ons is estimated at about $300 million, which would be offset by an "individual expatriation" provision that would force many Americans who renounced their citizenship to pay taxes. The moratorium on corporate inversions, a vaccine provision and an orphan drug credit provision would also pay for the tax breaks.