[Congressional Record Volume 147, Number 49 (Thursday, April 5, 2001)]
[Extensions of Remarks]
[Page E552]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          GLOBAL COMPETITIVENESS OF THE U.S. LEASING INDUSTRY

                                 ______
                                 

                            HON. JIM McCRERY

                              of louisiana

                    in the house of representatives

                        Wednesday, April 4, 2001

  Mr. McCRERY. Mr. Speaker, today I am introducing a bill that would 
eliminate a provision of the tax code which hinders the global 
competitiveness of the U.S. leasing industry.
  The leasing industry is important to the U.S. role in the global 
economy. Our manufacturers use leasing as a means to finance exports of 
their goods, and many have leasing subsidiaries that arrange for such 
financing. Many U.S. financial companies also arrange lease financing 
as one of their core services. The activities of these companies 
support U.S. jobs and investment.
  Enacted in 1984, the depreciation rules governing tax-exempt use 
property (referred to as the ``Pickle rules'') operate to place U.S. 
companies at a competitive disadvantage in overseas markets. Because of 
the adverse impact of the Pickle rules on cost recovery, U.S. lessors 
are unable in many cases to offer U.S.-manufactured equipment to 
overseas customers on terms that are competitive with those offered by 
their foreign competitors. Many European countries, for example, 
provide far more favorable depreciation rules for home-country lessors 
leasing equipment manufactured in the home country.
  There is no compelling tax policy rationale for maintaining the 
Pickle rules as they apply to export leases. The Pickle rules were 
enacted in part to address situations where the economic benefit of 
accelerated depreciation and the investment tax credit were indirectly 
transferred to foreign entities not subject to U.S. tax through reduced 
rentals under a lease. That rationale no longer applies. The investment 
tax credit was repealed in 1986, and property used outside the United 
States generally is no longer eligible for accelerated depreciation. 
The present-law requirement that property leased to foreign entities or 
persons be depreciated over 125 percent of the lease term simply 
operates as an impediment to U.S. participation in global leasing 
markets.
  The global leasing markets have expanded dramatically since 1984. The 
competitive pressures on U.S. businesses from their foreign 
counterparts also have increased dramatically. Repealing the Pickle 
rules as they apply to U.S. exports will strengthen the competitiveness 
of the U.S. leasing industry and promote U.S. jobs and investment.
  I am pleased my friend and colleague from California, Mr. Matsui, is 
introducing similar legislation and look forward to working with him 
and others to unshackle the leasing industry from these outdated 
constraints.

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