Republican tax cut will aid many businesses

The Associated Press

WASHINGTON -- From railroads to arrowhead makers to huge multinational companies, the $792 billion tax cut package pushed through Congress by Republicans has help for businesses large and small.

Roughly $72 billion of the total cuts over 10 years would directly benefit business, and many stand a good chance of eventually becoming law even if President Clinton vetoes this version of the bill as he has promised.

"Once you've gotten into the bill, you can go back up to the Hill and say, 'This is noncontroversial because it's been passed by either the House or Senate,' " said Evan Liddiard, a partner at the KPMG accounting firm's national tax office. "You've gotten a foot in the water."

Some of the breaks are big and complicated, such as a $24 billion change in the arcane world of international taxes to allow U.S.-based companies a new global way of calculating credits for interest expenses incurred while operating in a foreign country. General Motors Co. led the lobbying effort for that measure.

Some are simple and much smaller: A provision with negligible cost inserted by Rep. Dave Camp, a Republican whose Michigan district is prime hunting territory, would allow makers of specialty big-game arrowheads to pay a lower excise tax because they no longer would be defined as "essential components" of standard arrows.

For business lobbyists, the changes merely rectify unfair or onerous portions of the tax code, even if they primarily benefit single industries or just one company.

"It redresses many inequities of the current tax law that needlessly restrict small business growth, stability and job creation," said Nelson Litterst of the National Federation of Independent Business.

But even some Republicans recoiled at the many provisions aimed at specific interests.

"For years, and this bill is no exception, we have put tax loopholes for special interests ahead of tax relief for working families," said Sen. John McCain, R-Ariz., who nonetheless voted for the bill.

The sheer size of the tax cut, which would be the largest since 1981, ensured that lobbyists stood a good chance of getting their provisions included.

Railroads and inland waterway barge companies, for example, objected to laws forcing them to continue paying a 4.3-cent-a-gallon fuel excise tax to help reduce the federal budget deficit -- a deficit that no longer exists. Excise taxes, they argued, are normally earmarked for a specific purpose, and this tax no longer had one.

The money, GOP sponsors said in a letter to colleagues, could be used by the companies themselves to "improve our nation's railways and reduce transportation and shipping costs for agriculture and businesses." The tax would be repealed by the Republican bill.

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