[Congressional Record (Bound Edition), Volume 150 (2004), Part 14]
[Senate]
[Page 18931]
[From the U.S. Government Publishing Office, www.gpo.gov]




                  JUMPSTART OUR BUSINESS STRENGTH ACT

  Mr. SMITH. Mr. President. I rise to speak about an important piece of 
legislation that is pending before Congress. The Jumpstart Our Business 
Strength, JOBS, Act, also known as FSC/ETI. This bill was passed by 
both the House and the Senate earlier this year and now awaits the 
appointment of conferees by the House of Representatives. As a Senate 
conferee, I am hopeful that we can move quickly toward a conference 
with the House and complete action on FSC before the 108th Congress 
adjourns.
  This bill has aptly been named the JOBS Act because of the direct 
impact it will have on businesses and employment in the United States. 
I believe this bill can strengthen the U.S. shipping industry. Over the 
past year I have worked closely with my colleagues, Senators Trent 
Lott, John Breaux and others, to provide critical tax reform for the 
U.S. maritime industry. I intend to work in conference to provide 
necessary relief to the maritime industry in Oregon and elsewhere 
throughout our country.
  It is clear to me that the ability of the American shipowner to 
operate ships on a comparable economic basis as foreign competitors is 
vital to the competitiveness of the U.S.-flag industry. Yet United 
States shipping companies are subject to significantly higher taxes 
than their foreign-based competition, particularly those that operate 
foreign vessels under what are commonly known as ``flag-of-
convenience'' countries. Thus, American shipowners are increasingly 
unable to compete with their foreign-flag counterparts in the foreign 
trade of the United States.
  Recently, many of the industrialized trading partners of the U.S., 
including the United Kingdom, Norway and Germany, have developed 
tonnage-based corporation tax regimes, known as ``tonnage tax'' 
regimes, to enable their fleets to compete fairly on the international 
stage. In a similar manner, our proposed tonnage tax provisions would 
authorize an alternative U.S. tax regime based upon the tonnage of a 
taxpayer's U.S.-flag fleet. That alternative regime would create a 
positive economic environment for U.S.-flag international shipping 
operations in line with that of other major U.S. trading partners.
  This legislative provision is urgently needed to preserve U.S.-flag 
shipping and related employment opportunities for U.S. merchant 
mariners. At this time, there are only 89 U.S.-flag vessels engaged in 
the foreign trade that are operated by U.S. companies to which the 
tonnage tax regime would apply. Implementation of the tonnage tax 
regime is required now to prevent further reductions in an already 
decimated U.S.-flag commercial fleet and depleted U.S. mariner pool.
  It is also important to the U.S. maritime industry that we enact an 
additional reform measure to defer U.S. tax on the foreign shipping 
income of a controlled foreign corporation, CFC--but only if that CFC 
is affiliated with a U.S. company that maintains a qualified fleet of 
at least two U.S.-flag commercial vessels. Generally, the U.S. does not 
tax foreign-source income earned by a CFC until that income is 
repatriated as a dividend to the U.S. shareholders of the CFC. However, 
a CFC's foreign shipping income is taxed to its U.S. shareholders in 
the year earned without regard to whether it is then, or ever, 
distributed to those shareholders.
  I look forward to working with my Senate and House colleagues towards 
enactment of the FSC/ETI tax legislation and to ensure that these 
critical maritime provisions are included in the final version of the 
bill.

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