Senator says offshore outsourcing provision must be revisited

Senate Finance Chairman Charles Grassley, R-Iowa, said Tuesday that he believed a Senate-approved amendment to the corporate tax bill that limits outsourcing of federal contracts to overseas workers would have to be modified in conference to secure the support of President Bush.

The amendment, a compromise worked out by Sen. Christopher Dodd, D-Conn., and Finance ranking member Max Baucus, D-Mont., includes a number of broad exceptions including contracts for national security purposes and contracts involving countries that have already opened their procurement markets to U.S. bidders through international agreements. But Grassley said those exceptions did not go far enough and would have to be revisited in conference.

"I think it will have to be modified further if we are going to get the White House to sign it," he said.

In the House, Majority Leader Tom DeLay, R-Texas, said Tuesday he would like to move corporate tax legislation that repeals the foreign sales corporation/extra-territorial income exclusion to the House floor within the next four weeks.

"I would hope we could get that bill to the floor before we break for the Easter recess," DeLay said.

DeLay deferred to Ways and Means Chairman William Thomas, R-Calif., about the bill's content, but noted that Thomas' latest proposal included a provision to address the alternative minimum tax. The Ways and Means-passed FSC/ETI bill would provide relief from the corporate AMT at a cost of $6.7 billion over 10 years. Grassley said he believed if the Senate could pass a FSC/ETI bill, it would help break the logjam in the House by showing the extent of bipartisan support for many of the same proposals Thomas is putting forward.

DeLay, asked about the prospects for extending or making permanent previously passed tax cuts, said he thought the House would support whatever tax relief that could pass the Senate -- so long as it did not include a tax increase.

"The Senate over the past few years has been the lowest common denominator. We'll take what we can get," he said.

DeLay said he hoped Congress this year would at least pass an extension of the full $1,000 child tax credit, so-called marriage penalty relief and expansion of the 10 percent tax bracket. He said Republicans would "live to fight another day" and would try to make tax cuts permanent after the November elections.

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