With House Ways and Means Chairman Bill Thomas Thursday unveiling his version of the tax bill to replace the Foreign Sales Corporation, Wall Street may be a little more nervous about the outlook. The Thomas version has been reshaped and sharply cut back from his original proposal in order to win over balky Republicans on the committee. But the two key provisions he has dropped -- the tax holiday for multinationals holding profits abroad to avoid the 35% corporate tax rate at home and the extension of the R&D tax credit that is due to expire at year`s end -- are safely in the bipartisan Senate bill worked out by Chairman Chuck Grassley of Senate Finance and Sen. Max Baucus, the ranking Republican.
Thomas wants the two provisions he dropped, but reckons he can get them back once he gets into a conference with the Senate, meanwhile using the resources they represent to pacify Republicans on his committee who might otherwise give him trouble next Tuesday when the bill`s mark-up is scheduled. Thomas clearly will not get all the supply-side goodies that he packed into his original version, having to throw many of them over the side to accommodate the approach favored by the Crane-Rangel version in Ways&Means (which parallels the Senate bipartisan approach). I`m still banking on Thomas getting a decent bill to the President`s desk before Congress closes down for the holidays. The New York Times account this morning by Edmund Andrews catches some of this flavor:
"House Leaders Are Pushing To Cut Corporate Taxes"