[Congressional Record Volume 153, Number 43 (Tuesday, March 13, 2007)]
[Extensions of Remarks]
[Page E530]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                 INTRODUCTION OF ACTIVE FINANCING BILL

                                 ______
                                 

                          HON. RICHARD E. NEAL

                            of massachusetts

                    in the house of representatives

                        Tuesday, March 13, 2007

  Mr. NEAL of Massachusetts. Madam Speaker, today I am pleased to join 
my friend and Committee colleague Representative Dave Camp in 
introducing legislation to make permanent the Subpart F provision for 
active financial services income. It is time to end the temporary 
extensions of this important incentive and finally make this a 
permanent part of the tax code. In the Senate today, Chairman Baucus 
and Senator Hatch will also be filing identical legislation.
  The U.S. financial services industry employs workers all across the 
U.S. The continued health and vitality of this industry depends on the 
level of success of these U.S. companies in the global market. However, 
one important incentive expires at the end of next year, which allows 
these companies to defer U.S. tax on the active business financial 
services income earned by foreign subsidiaries of U.S. financial 
services companies. Other active U.S. businesses enjoy this deferral 
for active business operations, so it just makes sense that financial 
services companies should as well. The deferred tax would be triggered 
when that income is sent back as a dividend to the U.S. parent.
  While the U.S. financial services industry is a global leader, the 
market is fiercely competitive with every company searching for some 
advantage over another. If U.S. financial services companies are unable 
to compete in global markets, foreign firms will fill the void. In that 
case, the thousands of jobs necessary to support a global financial 
services operation will be lost to foreign companies.
  Current law includes stringent safeguards to ensure that the income 
eligible for deferral of U.S. tax is real business income and is earned 
by local operations serving local markets. Importantly, a qualifying 
business cannot be one that is based in a tax haven to serve other 
markets. To qualify, a company must be actively engaged in a financial 
services trade or business and must predominantly serve customers in 
the country in which it is located. These common-sense requirements 
ensure that this exception works as intended.
  Deferral for active financial services income has been the law for 
most of the history of the corporate income tax. However, since 1997, 
it has only been a temporary provision in the code and extended many 
times. It is time for Congress to once again make this exception a 
permanent part of the code providing the stability our U.S. financial 
services indistry needs to remain the global leader. I urge you to join 
us in this effort.


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  March 13, 2007--On Page E530 the following appeared: I urge you 
to join U.S. in this effort.
  
  The online version should be corrected to read: I urge you to 
join us in this effort.


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