Dems in retreat...
Good news, bad news, good news, take your pick.
http://www.internetnews.com/bus-news/article.php/3350181
By Roy Mark
"The U.S. Senate rejected two Democratic efforts Wednesday to amend
a corporate tax bill containing key provisions favored by tech companies
with international operations.
The amendments sought to eliminate or severely limit a one-year proposal
to reduce foreign dividend taxes from 35 percent to 5.25 percent.
If ultimately passed by Congress, proponents say the tax provision will
"repatriate" more than $300 billion into the U.S. economy and create as
many as a half million new jobs. As they did in March when the same
legislation came before the Senate, Democrats used the debate on the bill
as a platform to denounce offshoring, calling the provision to reduce the
tariffs a tax subsidy for companies moving jobs offshore.
Part of the much broader Jumpstart Our Business Strengths Act (JOBS),
the foreign dividends tax break has drawn the outspoken support of TechNet,
the influential network of CEOs and senior partners whose members include
Intel (Quote, Chart), Cisco (Quote, Chart), Hewlett-Packard (Quote, Chart)
and Microsoft (Quote, Chart).
TechNet was founded by Silicon Valley venture capitalist John Doerr to lobby
Washington on national technology issues.
"Move your jobs overseas and we'll give you a tax break," Sen. John Dorgan
said as he threw his support behind an amendment by fellow Democrats John
Breaux of Louisiana and Diane Feinstein of California to "ensure the repatriated
tax breaks would be used for job creation."
Republican John Ensign of Nevada countered that the Breaux-Feinstein
amendment was a "poison pill," adding, "If the money is overseas, then let's
lower the taxes." George Allen (R-Va.) said the amendment was impracticable
because of its narrow definitions.
"The Breaux-Feinstein amendment would not allow companies to use their profits
for job training to upgrade the skills, capabilities and productivity of their U.S.
workers. They would not be able to fund start-up U.S. businesses," Allen said.
The amendment was defeated with 15 Democrats and Independent Jim Jeffords
of Vermont joining the unified Republican majority. Later in the day, a similar
majority defeated an amendment by Democrat Bob Graham of Florida to substitute
payroll tax cuts for the foreign dividends tax breaks.
John Kerry of Massachusetts, the presumptive Democratic presidential nominee,
was attending a Cinco de Mayo celebration in Los Angeles and was the lone senator
not voting on the amendments.
"The defeat of the Breaux-Feinstein Amendment clears the way for the Senate to make
it beneficial for business to bring their profits back to the United States instead of
investing those profits in other countries. The defeated amendment would have made
that effort much more difficult," Allen said in a statement after the vote.
Debate continues Thursday on the broader JOBS Act aimed at addressing European
Union trade sanctions that went into effect March 1, when the EU began collecting a
five percent penalty tariff on a wide variety of U.S. goods. The penalty increases by
one percent per month over the next year.
The sanctions followed a ruling last year by the World Trade Organization (WTO)
that called an annual $5 billion tax break given to U.S. exporters an illegal export
subsidy. The WTO set a March 1 deadline for Washington to change its tax code or be
penalized.
The Senate fix is the JOBS Act, which alters portions of the corporate tax code in
order to satisfy the WTO and redistribute the tax breaks.
In March, Democrat Christopher Dodd of Connecticut used the same legislation
to win an amendment prohibiting federal contractors from moving government-
funded IT contracts overseas. If ever actually enacted, the amendment extends
indefinitely a congressional moratorium requiring that government jobs shifted
to private contractors have to stay in the United States.
However, significant exemptions allow federal contractors to continue offshoring
with the 28 European Union and Pacific Rim nations that are members of the
WTO's government procurement code. Neither India nor China is a member of
the WTO code.
In addition, waivers are included for contracts involving national defense and
homeland security, since some military systems incorporate parts made overseas.
In any event, Republicans insisted on and won language requiring the Commerce
Department to prove the amendment won't harm the economy or lead to more
job losses before it can be enacted.
That left little to actually ban and no fears of WTO sanctions. By a 70-26 vote,
the Senate approved the measure. "
See How India is handling international backlash:
NEW DELHI--Manoj Kunkalienkar doesn't panic when he hears stories about a
potential U.S. backlash against India over offshore labor.
http://news.com.com/2009-1022-5198950.html?part=dht&tag=ntop
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