FACTBOX: Business tax cuts sought in U.S. stimulus bill
(Reuters) - Banking and business groups are trying to persuade Democratic lawmakers to include a range of tax breaks in a massive U.S. economic stimulus bill, especially a break that would let companies use looming losses to offset profits earned in the past five years.
U.S. House Speaker Nancy Pelosi said on Wednesday that Congress aimed to finalize by mid-February a stimulus bill that could total $775 billion over two years.
Dozens of business groups, including the U.S. Chamber of Commerce, Business Roundtable, American Bankers Association, National Association of Homebuilders and Securities Industry and Financial Markets Association are lobbying Congress to give companies a wider window for using tax losses to offset taxable profits.
Specifically, the groups want to expand the so-called net operation loss carryback period to five years from the current two years. That would let businesses -- especially banks and home builders -- accelerate the use of allowable deductions so they can have cash available now when it is most needed, the lobbyists contend.
Other tax breaks sought by business groups to free up capital and improve their balance sheets include the following:
* Allow repatriation of foreign subsidiary earnings of U.S. companies at a lower tax rate.
* Suspend tax for companies that buy their own debt at a discount.
* Extend bonus depreciation and increased Section 179 expensing provisions and adopt a temporary investment tax credit.
* Cut corporate capital gains rate to 15 percent.
* Extend the reduced tax rate on dividends and capital gains.
* Cut borrower and lending fees for Small Business Administration loans to encourage more lending by banks.
* Lift 10 percent limit used by pension plans to "smooth out" unexpected market losses and keep them within 10 percent of fair market value.
* Lift requirement that Internal Revenue Service must approve any change in pension funding methods.
* Repeal 3 percent withholding tax on all government payments such as Medicare, grants and farm payments that go into effect in 2011.
* Allow real estate investment trusts to exclude from their gross income cancellation of indebtedness income related to certain real estate debt, as long as the debtor reduces the basis of another property.
* Allocate portion of Treasury Department's TARP program as equity to capitalize a Fed liquidity facility for new commercial mortgages and unsecured commercial real estate loans.
* Remove barriers that prevent foreign investors from injecting equity capital into commercial real estate and reduce limits on restructuring commercial mortgage-backed securities.
* Cut interest rate for loans backed by multifamily properties assisted with low income housing tax credits.
* Offer up to a 95 percent government guarantee for Small Business Administration loans up to $500,000 and cut lender and borrower fees.
* Allow banks to exempt from taxation interest income from loans to farmers, small businesses and economic development projects in rural areas.
Sources: U.S. Chamber of Commerce, Independent Community Bankers of America
(Reporting by Julie Vorman, Editing by Andre Grenon)
