Full article at http://www.iht.com/IHT/TODAY/FRI/FIN/tax.2.html
Paris, Friday, November 3, 2000 U.S. Bill to Avoid Trade War Falters in Tax-Cut Battle
By Steven Pearlstein Washington Post Service
WASHINGTON - The bitter battle between President Bill Clinton and Congress over a Republican-proposed tax cut has claimed another victim: a bill, desperately sought by big business, aimed at avoiding a costly trade war with Europe. The bill, which has strong bipartisan support in Congress, would replace $4 billion in tax breaks to big exporters with a revised tax regime that U.S. officials hope will pass muster under world trading rules.
Last year, the World Trade Organization ruled that the old tax breaks were illegal export subsidies, and the European Union threatened to retaliate with trade sanctions against U.S. companies unless the subsidies were repealed by Nov. 1.
But on Wednesday, after a revised tax regime proposed by the administration was passed unanimously by the Senate, House leaders refused to take up the bill, preferring to hold it hostage in their effort to pass a larger tax-cut bill that Senate Democrats had threatened to filibuster and Mr. Clinton has vowed to veto.
With the House's refusal to take action, the EU is now free to issue a list of $4 billion worth of U.S. exports to Europe that will be subject to 100 percent tariffs. Although the retaliatory tariffs may not take effect until next year, merely publishing them will cause problems for U.S. corporations.
U.S. businesses had made passage of the revamped tax breaks one of their top legislative priorities this year, and lobbyists swarmed all over the Capitol on Wednesday in a desperate, and ultimately unsuccessful, effort to press House leaders to grant final passage before recessing for the election.
''We've heard from our members, and they made it clear: This is one that has to get done,'' said Bruce Josten, vice president of the U.S. Chamber of Commerce. ''There can be some serious consequences to American business if this bill is not passed.''
''A disaster,'' said one lobbyist for an industry organization. ''It's simply ridiculous to start a trade war with our biggest customer because of this election-eve bickering.''
Ironically, businesses have paid dearly for having a Congress that is responsive to their interests. According to the Center for Responsive Politics, corporations donated more than $280 million during this election cycle to House candidates and the Democratic and Republican campaign committees, including $156 million to Republicans
Under the existing tax code, corporations receive substantial tax breaks if they funnel their exports through paper corporations set up in offshore tax havens. According to the journal Tax Notes, in 1998 alone Boeing Co. received a $130 million tax break under the program, Cisco Systems Inc. $55 million and Monsanto Co. $29 million.