WASHINGTON — An executive for Wal-Mart joined other executives Tuesday in warning a Senate panel that U.S. companies with foreign operations could lose millions and be less competitive globally if Congress isn’t careful in fixing a tax...
WASHINGTON — An executive for Wal-Mart joined other executives Tuesday in warning a Senate panel that U.S. companies with foreign operations could lose millions and be less competitive globally if Congress isn’t careful in fixing a tax break deemed by the World Trade Organization to be an illegal subsidy.
Lawmakers are under pressure to repeal a tax break for foreign-generated corporate income. If a fix isn’t in place by mid-August, the European Union will be able to retaliate against U.S. exports, including some apparel.
It’s been seven months since the WTO ruling, and EU officials continue to say they won’t retaliate as long as U.S. lawmakers are making progress in finding a legislative fix. However, so far a fix supported by business — a way to cut corporate taxes in another area while repealing the offending tax — has been elusive.
"It is vitally important for Congress to develop legislation that will not only assist those sectors of the U.S. economy that currently benefit from the (current tax break on foreign income), but which will enhance the competitive position of all American businesses in the global marketplace," David Bullington, vice president for tax at Wal-Mart Stores, told the Senate Finance Committee.
Bullington said a simple solution would be to reduce the corporate tax rate across the board, which would benefit all businesses. However, Bullington said he realized "that such a reduction may not be feasible in today’s environment."
Cutting corporate taxes, always a contentious issue in Washington, has been set aside as a GOP priority since federal coffers are being hit by the slow economy and the cost of the war on terrorism.
Bullington suggested other solutions to the foreign-income tax conundrum. They involve the labyrinth of tax rules covering capital investment, sales and income, and when exceptions are granted to foreign operations in order to avoid being taxed by both the U.S., as well as a foreign country. An estimated 4,000 U.S. corporations now benefit from the foreign income tax break.
"Congress should eliminate or at least reduce substantially situations that can result in double taxation," said Bullington, adding that provisions in the tax code "inappropriately compromise American international competitiveness."Executives from The Boeing Co., Caterpiller Inc. and Hewlett-Packard also testified.
The House Ways and Means Committee, where any tax change must originate, has been working on changing the tax code. Committee Chairman Bill Thomas (R., Calif.) has introduced a bill that calls for outright repeal of the offending tax break, but his proposal is meeting with opposition among GOP colleagues in the Republican-controlled House.
Senate Finance Committee Chairman Max Baucus (D., Mont.), whose committee also has jurisdiction over taxes, appeared frustrated by a lack of progress on the issue.
"Number one, we have to find a solution. Number two, there is none," said Baucus, who plans to create a Capitol Hill-Bush administration task force to address the issue.
As far as a pending trade war with the EU, Bob Zoellick, the U.S. trade representative, said his EU counterpart, Pascal Lamy, isn’t eager to retaliate.
The next step in the dispute is next month when the WTO is expected to decide the value of U.S. products the EU could retaliate against, equal to the edge the foreign-income tax break supposedly provides the U.S. The U.S. claims the value is $1 billion and the EU argues it’s $4 billion.
“I think what’s so interesting about the #MeToo movement and this whole new wave of feminism in general, is that women are finally seeing, ’Oh I can start my own company, oh I can lear to code, oh I can leave my nine-to-five job and do the thing I want to do,” said @brooklyndecker ahead of her @sxsw talk for @createcultivate. The former model took the stage to share wisdom about networking and female-driven entrepreneurship. #wwdeye #sxsw (📷: @jgreenery)
“I was making the guacamole when my scout saw me,” says model @stuckinteenage on being discovered just six months ago while working at @chipotlemexicangrill. Since then Williams has signed with @dnamodels, walked in her first show at @calvinklein and landed on the cover of @vogueitalia – a high point of any model’s career. To read @lisajlockwood’s full interview with the model on her experiences thus far, head to WWD.com – link in bio. (📷: George Chinsee)
“I love the idea of dialogue, period. It’s where I’ve always gotten my inspiration from: hearing other women speak, their journeys and their paths,” said @hereisgina, who delivered the keynote speech at the @sxsw conference for @createcultivate, the online platform and conference series for women. For her two panels, Rodriguez chose female empowering, female-led and female entrepreneurs to focus on. Head to WWD.com to read more about her thoughts on Time’s Up, growing up in a family of women and why we “need a girls’ club.” #wwdeye #sxsw (📷: @jgreenery)
Leading luxury brand are shaking things up to keep up with streetwear. Case in point: the arrival of @mrkimjones as artistic director of @diorhomme. Jones, who succeeds @Kris_Van_Assche, is seen as one of the handful of designers who can actually straddle the luxury and streetwear worlds — which could lead to even more changes at established brands. What could this mean for the rest of the menswear landscape? Head to WWD.com to find out what experts predict #wwdfashion (📷: @franckmura)
“It’s like buying groceries. You’re going to buy the best mango, the best mozzarella, the best things. You have to, or others are going to take it all,” said @gabrielahearst on why she uses only the finest fabrics. Last week, Hearst received her first @cfda nomination for Womenswear Designer of the Year, and earlier this month she opened a permanent showroom in Paris. To read @jessiredale’s interview with the designer and find out why this is shaping up to be a big year for her, head to WWD.com. #wwdfashion (📷: @francoisgoize)
“It’s an interesting thing, playing a younger version of your mother. It’s an interesting concept. I adore my mom and love her in every capacity, but it was just something that had never crossed my mind,” says @anniemstarke on playing a young Joan Castleman in “The Wife.” The same role will be played by her mother Glenn Close. Read more about her growing up in the film industry as the daughter of producer John H. Starke and Close and what she has planned for the future #wwdeye (📷: @nataliamantini)
@asics is launching a new streetwear sneaker inspired by its latest ambassador, @steveaoki. The Hyper-Kenzen x Aoki, which will launch at @footlocker stores exclusively tomorrow, is a slip-on style that incorporates the brand’s proprietary Gel technology through beads integrated into the midsole for comfort and endurance. Read the full story on WWD.com.