Treasury Department white paper on corporate tax shelters.

• Position: U.S. Treasury Dept.

July 9, 1999

On July 9, 1999, Tax Executives Institute submitted the following comments urging the House Committee on Ways and Means to proceed cautiously in including provisions relating to so-called corporate tax shelters in the tax bill scheduled for committee action by July 16. TEI's comments were prepared under the aegis of its Tax Shelter Task Force, which is chaired by Philip G. Cohen of Unilever United States Inc.

On behalf of Tax Executives Institute, I am writing to urge the Committee on Ways and Means to proceed cautiously in including provisions relating to so-called corporate tax shelters in the tax bill the Committee is currently crafting. Inasmuch as the Department of the Treasury's long-awaited "white paper" on corporate tax shelters was released just last week, TEI reluctantly concludes that it would be imprudent to include any tax shelter provisions in the bill scheduled for committee action by July 16. Indeed, because the Treasury's proposals continue to raise as many questions as they answer, we believe taking action at this time would constitute an unjustified and potentially counterproductive "rush to judgment."

Background

TEI is the preeminent association of business tax executives in North America. The Institute's 5,000 members represent 2,800 of the leading corporations in the United States and Canada. TEI represents a cross-section of the business community, and is dedicated to the development and effective implementation of sound policy, to promoting the uniform and equitable enforcement of the tax laws, and to reducing the cost and burden of administration and compliance to the benefit of taxpayers and government alike. Earlier this year, TEI testified that it "is not among those who believe no problem exists," and we continue to hold that belief. We also believe, however, that Congress's approach to the problem must be measured. Our continuing concern about the Treasury's overall approach to the tax shelter issue, even as refined in the White Paper, prompts this letter.

The Proposals in the White Paper Require Careful Study

On July 1, the Department of the Treasury released The Problem of Corporate Tax Shelters: Discussion, Analysis, and Legislative Proposals, a 188-page "white paper," which had been promised since the release of the Clinton Administration's FY2000 Budget early this year. The White Paper represents the Treasury Department's attempt to synthesize both testimony from congressional hearings and...