Tax Cut Package Contains Significant Business-Related Provisions.

• Position: Brief Article - Statistical Data Included

The items in the House Ways and Means Committee's most recent tax bill have passed a significant hurdle toward enactment. Negotiation and lobbying over its adoption now focus on a narrower set of issues.

The summary below touches on several of the key business-related provisions, according to FEI President and CEO Phil Livingston, who included a longer synopsis in Issue #12 of FEI Express (July 15), our e-newsletter. If you missed it, visit www.fei.org and click on FEI Newsletters. For the complete text of the legislation, click on http://www.house.gov/jct.

General Corporate Provisions

* Provide an alternative tax rate for corporate capital gains of 34 percent in 2000 (tax years after 12/31/99). This rate would decline one percentage point each year until reaching 25 percent. The 25-percent rate would apply to tax years beginning after 2008.

* Phase out the corporate AMT by increasing the limit on the amount of AMT credits allowable. After 2007, the corporate AMT would be repealed. A corporation could then use the AMT credit to offset 90 percent of its regular tax liability. In addition, repeal the 90-percent limitation on AMT foreign tax credits.

International Provisions

* Prohibit the disclosure of advance pricing agreements (APA) and related background file information.

* Modify the interest allocation rules under Section 864(e) to provide a one-time election under which the taxable income of an affiliated group from sources outside the U.S. would be determined by allocating and apportioning all interest expense of the worldwide affiliated group on a group-wide basis. The proposal would be effective for tax years beginning after Dec. 31, 2001.

* Repeal the foreign sales corporation limitation relating to the export of military property, effective for tax years beginning after Dec. 31, 2001.

Revenue Raisers

The bulk of this 10-year bill is covered by the...