[Congressional Record Volume 153, Number 48 (Tuesday, March 20, 2007)]
[Senate]
[Page S3391]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BAUCUS (for himself, Mr. Hatch, and Mr. Crapo):
  S. 940. A bill to amend the Internal Revenue Code of 1986 to 
permanently extend the subpart F exemption for active financing income; 
to the Committee on Finance.
  Mr. BAUCUS. Mr. President, I am pleased to join my friends and 
Colleagues, Senator Hatch and Senator Crapo in introducing legislation 
to make permanent the tax treatment in Subpart F for active financial 
services income earned abroad.
  The legislation that we are introducing today is identical to a bill 
we introduced in the 109th Congress. Since then, this exemption has 
been temporarily extended. But that extension will expire at the end of 
next year. This exemption ensures that the active financial services 
income earned abroad by American financial services companies, or 
American manufacturing firms with a financial services operation, is 
not subject to U.S. tax until that income is brought home to the U.S. 
parent company.
  By making this provision permanent, our legislation will put the 
American financial services industry on an equal footing with its 
foreign-based competitors. Those competitors do not face current home 
country taxation on active financial services income.
  This bill is about jobs in Montana. And it is about jobs in each of 
our States. One of these competitive American financial services 
companies employs hundreds of Montanans in Great Falls alone. So the 
health of that company is critically important to my State.
  American financial services companies successfully compete in world 
financial markets. We need to make sure, however, that the U.S. tax 
rules do not change that situation and make them less competitive in 
the world arena. This legislation will extend a provision that I 
believe preserves the international competitiveness of American-based 
financial services companies, including finance and credit companies, 
commercial banks, securities firms, and insurance companies. This 
provision also contains appropriate safeguards to ensure that only 
truly active businesses benefit.
  The active financial services provision is critically important in 
today's global economy. America's financial services industry is a 
global leader. It plays a pivotal role in maintaining confidence in the 
international marketplace. This is a fiercely competitive business. And 
American-based companies would surely be disadvantaged with an 
additional tax burden if we allow this exemption to lapse. Through our 
network of trade agreements, we have made tremendous progress in 
gaining access to new foreign markets for this industry in recent 
years. Our tax laws should complement, and not undermine, this effort.
  The temporary nature of the active financial services provision, like 
other expiring provisions, denies American companies the stability 
enjoyed by their foreign competitors. It is time to make permanent this 
subpart F active financial services provision. We need to allow 
American companies to make business decisions on a long-term basis.
  I invite my Colleagues to join us in supporting this legislation to 
provide consistent, equitable, and stable tax treatment for the U.S. 
financial services industry.
                                 ______