Economic stimulus, capitalization, IFTA, and Canadian activities take center stage.

• Position: Recent Activities

As Congress and the Administration moved toward enactment of legislation designed to stimulate the faltering U.S. economy, Tax Executives Institute submitted its recommendations to the House and Senate leadership and tax-writing committees. TEI endorsed the prompt enactment of legislation to provide significant tax relief to American businesses and consumers. "The key to recovery lies in developing the proper balance of tax and non-tax provisions and, further, the proper balance of individual and business provisions," TEI President Bob Ashby stated.

In two letters submitted in November, TEI stressed its belief that, rhetoric aside, Congress should craft a bill that includes provisions to stimulate business activity because such legislation will have a "multiplier effect" beyond that of narrow tax and spending programs. The legislation will serve as a catalyst to the broader goal of economic growth, Mr. Ashby said. "If the legislation spurs investments, jump-starts the economy, and decreases unemployment, all segments of society will benefit."

TEI recommended enactment of proposals--

* To lengthen the carryback period for net operating losses to five years;

* To repeal the corporate alternative minimum tax; and

* To allow substantial additional first-year depreciation on qualified investments.

These proposals can be enacted expeditiously; can be implemented with a minimum of administrative burden on either taxpayers or the government; and, most significantly, will place much needed funds in the hands of distressed businesses at a critical time, the Institute stated. "These proposals will accord tax relief to businesses and industries that need tax relief in a balanced, fair, and administrable manner and, by stimulating job retention and growth, benefit individual taxpayers as well."

The Institute also noted the proposals to adopt a payroll tax holiday for employers and employees. While acknowledging the stimulus effect of quickly putting cash in the hands of both employers and employees, the organization urged Congress not to underestimate the administrative burden and cost of implementing a proposal with insufficient notice to employers and affected government agencies.

The Institute's November 13 comments are reprinted in this issue, beginning on page 498.

Capitalization Guidance

In November, TEI commented on a proposal submitted by a group of companies and their advisers (the INDOPCO Coalition) to the Treasury Department and IRS...