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CONTACTS:
JO-ANNE PROKOPOWICZ (202) 637-3093
DOROTHY COLEMAN (202) 637-3077

FOR IMMEDIATE RELEASE

WASHINGTON, D.C., August 5, 1999 - The National Association of Manufacturers today applauded House members for passing the $792 billion compromise tax relief package. The House approved the bill 221 to 206. A vote on the conference report is expected later today in the Senate.

"The NAM is convinced that the current economy can support this tax relief package," said Michael Baroody, NAM’s senior vice president. "When you add up the annual GDP projected over the next 10 years, it would total approximately $114 trillion. For those concerned that this tax bill is ‘too big,’ we offer the following: a $792 billion tax cut, spread out over the same 10 years, is only seven-tenths of one percent of $114 trillion."

"Moreover, with federal surpluses projected to total more than $3 trillion over the next 10 years, we can afford to dedicate less than one-third of this surplus to tax relief for individuals and businesses," noted Baroody. "It is unfortunate that the President has already promised to veto the bill. The fact remains, though, that pro-growth tax cuts will generate economic growth and growth generates more money for the federal coffers. We hope the Senate joins the House in sending this message to the Administration by supporting the legislation."

The highlights of the conference report include:

Estate Tax Repeal: The phased-in repeal of the onerous ‘death tax’ is welcome news for NAM’s small and mid-sized members. Estate tax repeal is the tax law change that will have the most positive impact on their companies’ ability to grow.

S-Corp Rate Relief: The tax rate cut that reduces the top rate on S corp income by one percent. Will help these businesses recoup some of the ground they lost in 1993 when the top tax rate on S-corp income jumped to 39.6 percent.

International Tax Simplification: The package of international tax relief and simplification provisions in the bill will provide an effective economic stimulus by reducing compliance burdens and helping to level the playing field between U.S.-based companies and their foreign competitors.

Extension of the R & D Tax Credit: The five-year extension of the R&D tax credit is an important first step in making the credit permanent. Unlike a temporary extension, a permanent credit advanced by NAM would end the compliance and planning problems of a temporary provision and enhance the incentive value of the credit to make it more valuable to businesses. The technology revolution, fueled by R & D activities, has spurred the growth of budget surpluses.

Corporate AMT Relief: The NAM also is encouraged that the package includes several changes to the corporate alternative minimum tax. Clearly, this relief is needed to help companies struggling from the burden of this Anti-Manufacturing Tax. The NAM plans to continue the fight until the punitive AMT system is repealed.

According to Baroody, another positive change included in the bill is the extension of the exclusion for employer-provided education assistance through 2003. He added, however, that NAM members are disappointed that conferees did not agree to extend the exclusion to graduate education.

He concluded, "On the same note, it is regrettable that the final legislation did not include a reduction in the corporate capital gains tax rate. Lowering the capital gains tax rate reduces the cost of capital and promotes U.S. economic growth and job creation."