[Congressional Record Volume 142, Number 35 (Thursday, March 14, 1996)]
[Extensions of Remarks]
[Pages E357-E358]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         THE COMMON SENSE CORPORATE RESPONSIBILITY ACT OF 1996

                                 ______


                        HON. PETER J. VISCLOSKY

                               of indiana

                    in the house of representatives

                        Thursday, March 14, 1996

  Mr. VISCLOSKY. Mr. Speaker, because I am concerned about the hundreds 
of billions in taxpayer dollars spent every decade on Fortune 500 
corporations and special interests, today I am introducing legislation 
that will cut $39.575 billion in corporate welfare and end welfare for 
Ronald McDonald. The House has already passed the Personal 
Responsibility Act to reform welfare. it's time to pass the Commonsense 
Corporate Responsibility Act and get some of our richest corporations 
off the Government dole. This bill puts a balanced budget, jobs, 
education, and a clean environment ahead of handouts to Fortune 500 
companies and special interests.

[[Page E358]]

  Estimate on total corporate welfare expenditures range from $200 
billion to $500 billion over 5 years, which would go a long way toward 
balancing the budget and investing in our future. This bill would save 
$39.575 billion over 5 years by ending 6 programs and reforming 1 
program, some of the most egregious corporate welfare programs. Because 
I've limited this legislation to the most egregious examples, my bill 
is a litmus test for anyone who is serious about ending corporate 
welfare.
  My bill will end the territorial possessions tax credit, which will 
save taxpayers $19.8 billion over 5 years. Corporations chartered in 
the United States are subject to U.S. taxes on their worldwide income. 
However, the U.S. Territorial Possessions Tax Credit provided by 
section 936 of the IRC permits qualified U.S. corporations a tax credit 
that offsets some or all of their U.S. tax liability on income from 
business operations in the possessions. My bill would eliminate this 
tax credit because the current incentive encourages companies to move 
jobs and capital out of the 50 States to overseas locations. The tax 
credit is not cost effective because foregone tax collections are high 
compared to the number of jobs created in the possessions. For example, 
taxpayers lose an average of $70,000 in revenue for every job created 
in Puerto Rico. The many drug companies and electronic firms that have 
set up subsidiaries in the possessions often assign ownership of their 
most valuable assets--patents, trade secrets and the like--to their 
territorial operations, and then claim that a large share of their 
total profits is earned in the possessions and therefore eligible for 
the tax break.
  My bill will end the Foreign Sales Corporation [FSC] tax credit, 
which will save taxpayers $7.8 billion over 5 years. The tax code's FSC 
provisions permit U.S. exporters to exempt 15 percent of their export 
income from U.S. taxation. This encourages U.S. companies to form 
subsidiary corporations in a foreign country--which can just be a 
mailing address--to qualify as a FSC. A portion of the FSC's own export 
income is exempt from taxes, and the FSC can pass on the tax savings to 
its parent because domestic corporations are allowed a 100-percent 
dividends-received deduction for income distributed from a FSC. This 
program does not increase U.S. exports, and it may actually expand our 
trade deficit.
  My bill will end special tax treatment of alcohol fuels, which will 
save taxpayers $3.875 billion over 5 years. Manufacturers of gasohol (a 
motor fuel composed of 10 percent alcohol), get a tax subsidy of 54 
cents per gallon of alcohol used. Also known as ethanol, 95 percent of 
current production is derived from corn. The subsidy is designed to 
encourage the substitution of alcohol fuels produced from corn for 
gasoline and diesel. The gasohol tax break was enacted to lower the 
cost of producing a fuel that is not competitive. It targets one, 
specific, alternative fuel over many others--such as methanol, 
liquefied petroleum gas, compressed natural gas, or electricity--that 
could also substitute for gasoline or diesel. Alcohol fuel not only 
costs more, but also requires substantial energy to produce, 
diminishing the net, overall, conservation effect. Providing tax 
subsidies for one type of fuel over others is an inefficient allocation 
of resources when the subsidized fuel is more costly to produce than 
other fuels. Substantial losses in Federal tax revenue have primarily 
benefited Archer-Daniels-Midland, the Nation's chief gasohol producer.
  My bill will end irrigation subsidies, which will save taxpayers 
$4.15 billion over 5 years. Irrigation subsidies encourage inefficient 
use of water resources, including production of water-intensive crops 
in arid regions. In these regions, loss of natural river flows has 
destroyed wetlands and devastated fish and wildlife populations. Many 
of these subsidies go toward production of surplus crops, which the 
U.S. Government pays farmers not to grow. This double dipper subsidy 
costs taxpayers as much as $830 million annually. Also, these subsidies 
foster agricultural production on marginal lands, the cultivation of 
which requires excessive chemicals. Polluted drainage and runoff from 
these lands contributes to the degradation of rivers and streams, as 
well as to the contamination of aquifers and poisoning of fish and 
wildlife.
  My bill will end the practice of subsidizing the purchase of produce 
by foreign consumers, which will save taxpayers $3.5 billion over 5 
years. The United States Department of Agriculture subsidizes the 
export of agricultural commodities through the Export Enhancement 
Program [EEP]. U.S. exporters, primarily multinational commodity firms, 
participating in the EEP negotiate directly with buyers in a targeted 
country, then submit bids to the USDA for cash bonuses. The program, 
established under the Reagan administration, is ostensibly meant to 
match European export subsidies, but does more to boost exporters' 
profits than U.S. farm production. The program has not been an 
effective counterweight to foreign subsidies and has depressed world 
commodity prices, penalizing competitors who do not subsidize their 
exports.
  My bill will end the Market Promotion [MPP], which will save 
taxpayers $550 million over 5 years. The Market Promotion Program 
[MPP], which will save taxpayers $550 million over 5 years. The Market 
Promotion Program spends $110 million per year underwriting the cost of 
advertising American products abroad. In 1991, American taxpayers spent 
$2.9 million advertising Pillsbury muffins and pies, $10 million 
promoting Sunkist oranges, $465,000 advertising McDonald's Chicken 
McNuggets, $1.2 million boosting the international sales of American 
Legend mink coats, and $2.5 million extolling the virtues of Dole 
pineapples, nuts, and prunes. Wrangler of Japan--partly owned by 
Mitsubishi--collected $1.1 million from American taxpayers to advertise 
jeans in Japan, which were not even manufactured in the United States. 
The MPP has done little to assure that funds increase overseas 
promotional activities rather than simply replace private funds that 
would have been spent anyway. These companies hardly need a Federal 
subsidy for advertising, and the program has become a virtual 
entitlement for some of the biggest corporations in America.
  My bill will reform the Mining Act of 1872, which will save taxpayers 
$300 million over 5 years. The 1872 Mining Act permits companies 
(foreign or domestic) to extract valuable minerals from Federal land--
taxpayer-owned land--for next to nothing. They can purchase land for 
$2.50 per acre and pay no royalties on the minerals they extract. Each 
year, $2 billion to $3 billion worth of minerals are taken from public 
lands. Mining companies can ``patent''--or buy--20-acre tracts of land 
for $5 an acre or less. This patenting process has been used to sell 
more than 3.2 million acres of public land, an area about the size of 
Connecticut. Also, massive environmental damage has been left by mining 
operations on public lands. The cost of such cleanups is estimated at 
between $32 to $72 billion. The Atlanta Journal and Constitution 
newspaper editorialized that a Canadian company * * * was able to steal 
a $10 billion gold mine from the United States taxpayers, who owned 
both the property and the mineral rights. The company paid less than 
$10,000 for the land. My bill would charge royalties and lease land.
  The legislation I am introducing today will be a good start toward 
ending corporate welfare and balancing the Federal budget. I urge you 
and all of my House colleagues to support it.

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