Letter on H.R. 4213, the "Tax Extenders Act of 2009"
December 8, 2009
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, strongly supports legislation to extend expiring tax provisions, but has concerns with provisions of H.R. 4213, the "Tax Extenders Act of 2009," which would increase certain taxes and would limit the flow of foreign capital into the United States.
Although data indicate the economy has begun to emerge from a deep, prolonged recession, a major obstacle to recovery lurks. Thousands of U.S. businesses and individual taxpayers would face major tax increases if tax provisions—such as the R&D credit, the election to deduct state and local general sales tax, the election to expense "brownfields" environmental remediation costs, the railroad track maintenance credit, 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. An extension of these provisions would bring more certainty to U.S. tax law, foster more effective business decisions, and encourage investment.
While the Chamber strongly supports an extension of these provisions, the Chamber opposes the tax increase on carried interest provided in H.R. 4213. While this tax increase is represented as narrowly tailored to penalize wealthy hedge fund executives, the scope of this proposal would be far broader, directly or indirectly impacting more than 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 would have far-reaching impacts on capital formation and investment flows.
In addition, the Chamber has concerns with another revenue offset in this legislation. While the Chamber supports measures to improve taxpayer compliance and appreciates improvements made to the Foreign Account Tax Compliance Act of 2009, we remain concerned that these provisions would limit the flow of foreign capital into the United States and cause disruptions to international capital markets.
The Chamber supports legislation that would extend these vital tax provisions; however, the Chamber opposes the decision to include targeted tax increases in H.R. 4213. We look forward to working with Congress on this issue.
R. Bruce Josten