A tax agenda is already taking shape for next year | Norton Rose Fulbright
Rep. Bill Thomas (R.-California), chairman of the House Ways and Means Committee, said recently he expects three items to be on the agenda for next year: depreciation, reform of the “subpart F rules” that deal with US taxes on income earned by foreign subsidiaries, and extensions of expiring provisions.
Utilities are pressing for seven-year depreciation of power plants. Most power plants are depreciated today over 15 or 20 years. In the past when Congress has provided more generous depreciation, a project had to be placed in service after the new law took effect to benefit and then it benefited only on spending on the project after the effective date.
Meanwhile, Senators Max Baucus (D.-Montana) and Orrin Hatch (R.-Utah) are preparing to reintroduce their bill this summer on foreign tax issues. The bill is a laundry list of items sought by business. However, a Baucus aide said that the bill will not deal with “interest allocation” problems that prevent most US power companies from qualifying for foreign tax credits when they bring back earnings from abroad. Any relief in this area would be too expensive.
Baucus will become chairman of the Senate Finance Committee when the democrats regain control of the Senate in June.