[Congressional Record (Bound Edition), Volume 147 (2001), Part 4]
[Extensions of Remarks]
[Page 5395]
[From the U.S. Government Publishing Office, www.gpo.gov]



                      MAKE SUBPART F LAW PERMANENT

                                 ______
                                 

                          HON. RICHARD E. NEAL

                            of massachusetts

                    in the house of representatives

                         Tuesday, April 3, 2001

  Mr. NEAL. Mr. Speaker, I am very pleased to join Representative Jim 
McCrery and a majority of the Ways and Means Committee in introducing 
legislation to make permanent the exclusion from Subpart F of the 
Internal Revenue Code for active financial services income of U.S. 
businesses operating in foreign markets. This provision permits 
American financial services firms doing business abroad to pay U.S. tax 
on their foreign earnings only when those earnings are returned to the 
U.S. parent. The provision expires at the end of this year.
  This rule for active financial services is the same rule that applies 
to most other types of U.S. companies, and is the general rule in most 
of the industrialized world. Most competitors of U.S. financial 
institutions operate under tax regimes that generally do not tax 
currently active financial income earned outside their home countries. 
Making the Subpart F rule for active financial services permanent means 
that U.S. financial services companies will be on a level playing field 
throughout the life of the contract for which they are competing when 
they seek to compete in overseas markets with foreign-based financial 
services companies. While taxes are clearly not the only factor in 
determining the competitiveness of U.S. financial companies abroad, 
they do make a difference. In an increasingly global world with 
increasingly sophisticated competition, we cannot afford to put our 
financial services companies at such a disadvantage any longer.
  Mr. Speaker, my colleagues and I believe it is vital to make the 
active financing provisions of current law permanent, to provide 
stability to our American service industries and all who work for them.

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