CEOs Defend Foreign Tax Breaks As Health-Care Bill Looms
June 12 2009 - 1:47PM
Dow Jones News
CEOs of multinational companies pressed House lawmakers this
week not to raise taxes on their firms' foreign profits in order to
fund a $1.2 trillion overhaul of the health system.
CEOs that are members of the Business Roundtable, a trade group
of Fortune 500 companies, held meetings with individual House Ways
and Means Committee members to press their case on the
international tax issues.
According to those present, CEOs that participated included John
T. Chambers of Cisco Systems Inc. (CSCO), David M. Cote of
Honeywell International Inc. (HON), Kenneth I. Chenault of American
Express Co. (AXP) and Joseph M. Tucci of EMC Corp. (EMC).
They are fighting proposals by President Obama to curb a tax
break known as deferral, which allows firms to postpone taxes on
their foreign income as long as they do not repatriate it to the
United States. And they are finding some allies among House
Democrats.
"Deferral is not tax avoidance," said Rep. Richard Neal, D-Mass.
"If we want to engage in a conversation about making our companies
internationally competitive, we need a full-fledged debate about
the corporate tax code."
Neal said he told Obama, during a Tuesday meeting at the White
House, that changes to treatment of firms' foreign income should be
made only in the context of a broad revision of corporate
taxation.
"He said his mind is open," Neal said of Obama.
The CEO visits were just one part of a deluge of lobbying on the
foreign tax proposals, touched off by fears that Congress will tax
foreign earnings to help underwrite the health-care bill. Tax
directors of high-tech companies, including Hewlett-Packard Co.
(HPQ) and Adobe Systems Inc. (ADBE), also blitzed the Capitol this
week.
As Congress looks to advance the health-care legislation by the
fall, there is growing concern at the largest U.S. firms. Neal, in
an interview with Dow Jones, said there is a risk of bringing the
lobbying power of corporations against the health-care bill, which
is Obama's top domestic priority.
The House's top tax writer, Ways and Means Chairman Charles
Rangel, D-N.Y., has not ruled out taking some of those
international tax breaks back to fund the health initiative.
But there are other Democrats besides Neal that say they don't
favor that approach. "I'm reluctant," said Rep. Allyson Schwartz,
D-Pa., saying that the foreign profits issues "should be looked at
in a broader review of corporate taxes."
Referring to the various revenue proposals being considered to
pay for health-care legislation, some of which would involve tax
increases, Schwartz said, "We don't really want to do any of these
things, but we're determined to have [the bill] revenue-neutral
over 10 years."
-By Martin Vaughan, Dow Jones Newswires; 202-862-9244;
martin.vaughan@dowjones.com