Letter on H.R. 6049, the "Renewable Energy and Job Creation Tax Act of 2008"
September 24, 2008
TO THE MEMBERS OF THE U.S. HOUSE OF REPRESENTATIVES:
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, supports efforts to extend the expiring business tax provisions. However, the Chamber is concerned that the House Amendment to the Senate Amendment to H.R. 6049, the "Renewable Energy and Job Creation Tax Act of 2008," would permanently increase taxes on businesses to pay for a temporary, one-year extension of expiring business tax provisions.
Specifically, the Chamber strongly supports provisions relating to:
- Extension of Expired and Expiring Business Tax Provisions—The Chamber believes that legislation is urgently needed to extend critically important provisions. A number of provisions—such as the R&D credit, the election to deduct state and local general sales tax, and the railroad track maintenance credit—already have expired. Others—such as the exception under subpart F for active financing income and the look-through treatment of payments between related controlled foreign corporations (CFCs) under the foreign personal holding company rules—expire at the end of this year.
- Clean Energy Tax Incentives—The Chamber supports the extension of the clean energy tax incentives. These incentives will go a long way toward the development of the renewable and alternative energy technologies essential to America's energy future. The Chamber believes it is critical to promote the responsible use of all energy sources. To reach this goal, government and business should support investment in new technologies that expand alternative energy and enable traditional sources of energy to be used more cleanly and efficiently.
The Chamber has concerns with revenue offset provisions included in the House Amendment to the Senate Amendment to H.R. 6049, including those related to:
- Punitive Oil and Gas Taxes—Congress must be mindful of the crosswinds hitting the American economy from the financial sector to the housing sectors. The Chamber believes tax increases on the oil and gas industries are out of sync with an American economy showing great demand for increased domestic energy production, which could provide the opportunity for the energy industry to add a significant number of high-wage jobs. The Chamber is concerned with provisions that would freeze the section 199 deduction for oil and gas companies. This change would discourage energy investment, resulting in the loss of jobs, a decrease in the supply of oil and gas, and an increase in the costs for businesses that rely on oil and gas.
The Chamber also is concerned with the proposed modification of the foreign tax credit rules for oil and gas companies, as this change would place domestic firms at a competitive disadvantage to foreign oil and gas manufacturers.
- FUTA Surtax—The Chamber is concerned with the proposed extension of the FUTA surtax, which was added to the tax code in 1976 as a temporary measure and should have been allowed to expire long ago, having outlived the purposes and term that served as the rationale for its enactment.
- Nonqualified Deferred Compensation—The Chamber acknowledges that tax 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 Chamber appreciates the House efforts to extend much needed business tax provisions, but remains concerned that this legislation would permanently increase taxes on businesses.
R. Bruce Josten