[Congressional Record (Bound Edition), Volume 145 (1999), Part 8]
[Extensions of Remarks]
[Page 11821]
[From the U.S. Government Publishing Office, www.gpo.gov]



   INTERNATIONAL TAX SIMPLIFICATION FOR AMERICAN COMPETITIVENESS ACT

                                 ______
                                 

                          HON. SANDER M. LEVIN

                              of michigan

                    in the house of representatives

                          Monday, June 7, 1999

  Mr. LEVIN. Mr. Speaker, today I am introducing along with my 
colleagues Representatives Houghton, Matsui, Sam Johnson, Herger, 
English, and Crane to introduce our bill, ``The International Tax 
Simplification for American Competitiveness Act of 1999.'' There has 
been general agreement that the current U.S. rules for taxing 
international income are unduly complex. This legislation addresses 
these problems by rationalizing and simplifying the international tax 
provisions of the U.S. tax laws by simplifying foreign tax credits; 
encouraging exports; providing incentives for performance of research 
and developing in the United States; enhancing U.S. competitiveness in 
other industrialized countries; and minimizing revenue loss.
  Our current tax policies are out of synch with our trade policies and 
the realities of the global marketplace. In the early 1960s, U.S. 
companies focused their manufacturing and marketing strategies in the 
United States, which at the time was the largest consumer market in the 
world. U.S. companies generally could achieve economies of scale and 
rapid growth-selling exclusively into the domestic market. In the early 
1960s, foreign competition in U.S. markets generally was 
inconsequential.
  The picture today is completely different. First, U.S. companies now 
face strong competition at home. Since 1980, foreign direct investment 
in the United States has increased by a factor of six (from $216 
billion to $752 billion in 1997), and imports have tripled as a share 
of GDP from an average of 3.2 percent in the 1960s to an average of 
over 9.6 percent over the 1990 97 period.
  Second, foreign markets are more attractive today than they were in 
the past. For example, from 1986 to 1997, foreign sales of S&P 500 
companies grew 10 percent a year, compared to domestic sales growth of 
just 3 percent annually. Foreign markets also afford increasingly 
attractive investment opportunities.
  From the perspective of the 1960s, there was little apparent reason 
for U.S. companies to direct resources to penetrating foreign markets, 
since U.S. companies should achieve growth and profit levels that were 
the envy of their competitors with minimal foreign operations. By 
contrast, in today's economy, competitive success requires U.S. 
companies to execute global marketing and manufacturing strategies with 
the result that provisions of our tax system designed when foreign 
operations were viewed as presumptively tax-motivated have become 
increasingly outmoded.
  It is because of the great changes in global trade that we involved 
ourselves in this issue. The current rules guiding our international 
tax policies were written at a time when the focus was on preventing 
tax avoidance, not on promoting international competitiveness. Our main 
goal this year is to build on the successes that we had in the 105th 
Congress. This will be our fourth bill in this area, and our third with 
our Senate counterparts, Senators Hatch and Baucus. It includes some 
new provisions, but in many ways reflects the reality that much has 
been done to correct some of the problems facing U.S. industries in 
this arena, but there is a great deal of work left to be done.
  Our first order of business is to simplify the international tax 
regime to ensure American competitiveness both at home and abroad. The 
tax provisions that we are introducing today will significantly affect 
the national welfare and will enhance the participation of the United 
States in the global economy of the 21st century. I look forward to 
working with my House and Senate colleagues to pass this important 
piece of legislation into law.

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