Letter Opposing H.R. 3996 the "Temporary Tax Relief Act of 2007"
November 7, 2007
The U.S. Chamber of Commerce, the world's largest business federation representing more than three million businesses and organizations of every size, sector, and region, urges you to oppose H.R. 3996, While the Chamber supports an extension of alternative minimum tax (AMT) relief and the extension of expiring tax provisions, the Chamber believes that these provisions should not be paid for with onerous new taxes on employees, American businesses, and the economy.
The Chamber supports the extension of AMT relief for nonrefundable personal credits and the extension of the increased AMT exemption amount, but without the inclusion of revenue raisers. The Chamber believes that the AMT was never intended to be the revenue generator that it has become; rather, the AMT was intended to tax wealthy individuals who escape the regular income tax through purportedly "excessive" use of legal tax provisions. Therefore, while the Chamber applauds the extension of AMT relief, it strongly opposes raising taxes to fund relief from a tax that was never intended as a revenue raiser.
The Chamber supports the extension of the deduction for state and local general sales tax, of the R&D credit, of the 15-year straight-line cost recovery for qualified leasehold improvements and qualified restaurant improvements, of expensing for "brownsfield" environmental remediation costs, of the railroad track maintenance credit, of the enhanced charitable deduction for contributions of food inventory, and of the enhanced deduction for corporate contributions of computer equipment for educational purposes. The Chamber also considers the one-year delay in the implementation of the onerous three-percent withholding requirement, enacted by the "Tax Increase Prevention and Reconciliation Act of 2005," a positive step toward developing a permanent solution of fully repealing the withholding requirement.
The Chamber strongly opposes the revenue raising provisions of H.R. 3996 and the undue burden these provisions place on the American economy, workers, and the business community. Specifically, the Chamber opposes the tax increase on carried interest. While this tax increase was represented as narrowly tailored to penalize wealthy hedge fund executives, the scope of this proposal would be far broader, directly or indirectly impacting over 15.5 million partners invested in 2.5 million partnerships. The partnership structure is widely employed by various sectors of the economy including real estate, venture capital, private equity, and retail. The proposed changes should not be considered lightly as they would have far-reaching impact on capital formation and investment flows.
The Chamber opposes the nonqualified deferred compensation provisions of H.R. 3996. The deferred plans used by offshore partnerships are created as part of complex legal agreements between managers and limited partners who are usually passive foreign investors. Foreign investors utilize these deferral arrangements to better align the interests of the manager with the investors. Altering these economic arrangements could cause these investments to migrate to other countries. The United States should continue its policy of aggressively courting foreign capital inflows.
The Chamber opposes a delay in the implementation of the interest allocation rules enacted by the American Jobs Creation Act of 2004 because of the adverse effect that delay has on U.S. competitiveness in global markets. Delaying implementation of these rules effectively rewrites tax law changes that reformed rules widely recognized as anti-competitive and harmful to U.S. businesses with foreign operations.
Finally, the Chamber opposes the language in the legislation that would limit the ability of the IRS to utilize private collection agencies or prohibit the continuation of the private debt collection initiative which has resulted in a cost effective collection of back taxes and a simultaneous protection of taxpayer rights, privacy, and security.
Due to the inclusion of those revenue raising provisions, the Chamber strongly opposes H.R. 3996 and may consider votes on, or in relation to, this issue in our annual How They Voted scorecard.
R. Bruce Josten