[Congressional Record Volume 145, Number 24 (Wednesday, February 10, 1999)]
[Extensions of Remarks]
[Page E193]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                      INTRODUCTION OF LEGISLATION

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                            HON. JIM McCRERY

                              of louisiana

                    in the house of representatives

                      Wednesday, February 10, 1999

  Mr. McCRERY. Mr. Speaker, today I am pleased to introduce on behalf 
of myself, Mr. Neal of Massachusetts and several of my other colleagues 
from the Ways and Means Committee, legislation to permanently extend 
the exception from Subpart F for active financing income earned on 
overseas business. U.S.-based finance companies, insurance companies 
and brokers, banks, securities dealers, and other financial services 
firms should be permitted to act like other U.S. industries doing 
business abroad and defer U.S. tax on the earnings from the active 
operations of their foreign subsidiaries until such earnings are 
returned to the U.S. parent company. Without this legislation, the 
current law provision that keeps U.S. financial services industry on an 
equal footing with foreign-based competitors will expire at the end of 
this year. Moreover, this legislation will afford America's financial 
services industry parity with other segments of the U.S. economy.
  Due to the international growth of American finance and credit 
companies, banks and securities firms, and insurance companies and 
brokers, this legislation is essential in securing the position of the 
U.S. financial services industry by making this provision a permanent 
part of the law and ending the potential impairment of these industries 
because of the ``on-again, off-again'' system of annual extensions that 
does not allow for fiscal certainty.
  Furthermore, Mr. Speaker, we believe the permanent extension of this 
provision is particularly important today as the U.S. financial 
services industry is the global leader and plays a pivotal role in 
maintaining confidence in the international marketplace. Also, recently 
concluded trade negotiations have opened new foreign markets for this 
industry, and it is essential that our tax laws complement this trade 
effort.
  Additionally, Mr. Speaker, while this legislation merely provides for 
a permanent extension of current law, the highly competitive and global 
nature of many of the businesses that will benefit from this 
legislation must continually be reassessed to ensure that U.S. tax 
policy does not hamper their ability to compete in the international 
marketplace. One such area to which I hope the Congress and Treasury 
department will give further attention is the business of reinsurance. 
This industry is placing more business outside of their home countries, 
a trend which continues and is accelerating. Many of these decisions 
are motivated by a variety of business reasons and the highly 
competitive global nature of the business itself. While some of the 
changes made last year were included to close down perceived tax 
avoidance schemes, we, in turn, should not create or perpetuate a 
restrictive tax regime that penalizes those who are doing legitimate 
business transactions and have significant business operations in those 
countries.
  In closing, we must not allow the tax code to revert to penalizing 
U.S.-based companies by allowing to occur the expiration of the 
temporary provision after this year and hope that this legislation can 
be given every possible consideration.

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