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120357977
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[American Timber Supply and Manufacturing Incentives Act] [Loose]
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120357977
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[American Timber Supply and Manufacturing Incentives Act] [Loose]
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Records of the Council on Environmental Quality (Clinton Administration)
Kathleen McGinty's Files
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FOIA Number: 2012-0769-F
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the William J. Clinton
Presidential Library Staff.
Collection/Record Group:
Clinton Presidential Records
Subgroup/Office of Origin:
Council on Environmental Quality
Series/Staff Member:
Kathleen (Katie) McGinty
Subseries:
OA/ID Number:
17806
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Folder Title:
[American Timber Supply and Manufacturing Incentives Act] [Loose]
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61
5
4
2
202 300 2004:# 2/10
U.S.
WASHINGTON, D.C.
REPRESENTATIVE
1231 / nngworth House Office Building
Washington, D.C. 20616
NEWS
PETER
FUGENC
211 East 7th Avenue
Frigana, on 97401
coos BAY
DEFAZIO
Cons Art Museum Building
215 South 2nd Street
Coos Boy, OR 97429
4th Congressional
ROSEBURG
612 S.E. Jackson St. #9
District, Orogon
P.O. Bax 2460
Roselawg, OR 97470
FOR MORE INFORMATION
Contact:
202-225-6416
DEFAZIO INTRODUCES NEW BILL TO SLOW LOG EXPORTS
WASHINGTON, D.C. -- Legislation to eliminate log export tax
subsidies and create a new tax incentive for domestic lumber
manufacturing was introduced today by Rep. Peter DeFazio (b-
ore.).
"This bill will accomplish my goal of cutting log exports
without using the 100-pound sledgehammer of regulations and
quotas," DeFazio said. "special interests are fighting tooth and
nail to keep their log export tax breaks; I mean to put an end to
it,"
DoFazio's plan combines and improves on two bills that he
introduced last year with Rep. Jolene Unsoeld, (D-Wash.) and Rep.
Pete stark (D-calif.). The two-pronged plan would eliminate tax
breaks available to log export companies who use Foreign Sales
Corporations, and use the savings to reduce the capital gains tax
rate on timber sold to domestic manufacturers by up to 30
percent.
According Lo DeFazio, his proposal will cut subsidies for
log export companies by about $80 million a year, while giving
Northwest timber growers a new incentive to sell their logs to
American mills.
DeFazio's bill was introduced as the House Ways and Means
Committee prepares to consider President Clinton's tax proposals.
DcFazio said he was concerned that the committee would adopt an
amendment expected to be offered by Rep. Mike Kopetski that would
lower the tax on timber capital gains for all tree growers, even
those who export their logs. Kopetski proposes paying for his
bill with the savings goined by climinating the foreign sales
corporation tax break for log exports.
"It's a sweet deal for the Pacific Northwest's log
exporters: use the money from one log export subsidy, which the
Precident already said he opposes, to pay for a new and more
expansive cubsidy for caw luy exports, DeFazio said. "But my
bottom line is simple: The U.S. Laxpayer should not be asked to
subsidize log -- and JOB -- exports."
According to revenue estimates prepared by the bipartisan
Joint Committee on Taxation, tax breaks available to log
exporters using foreign sales corporations cost the U.S. taxpayer
an average of $80 million each year. DeFazio said the Kopetski
amendment would create a new tax break for log exporters worth
about $35 million a ycar.
DeFazio's bill in supported by the National Association of
Home Builders, the United Brotherhood of Carpenters and Joiners,
the Western Forest Industries Assocation, and the Northwest
Independent Forest Manufacturers.
Sen. Max Baucus, D-Mont., is expected to introduce similar
legislation in the U.S. Senate.
-30-
SENT BY:
5- 6-93 : 7:48AM
202 966 2554,# 3/10
Member's Original Signature
May 6, 1993
103D CONGRESS
1ST SESSION
IN THE HOUSE OF REPRESENTATIVES
Mr. DeFAZIO introduced the following bill; which was referred to
A BILL
To amend the Internal Revenue Code of 1986 to provide incentives for domestic timber
production and manufacturing, and to deny the benefits of certain export subsidies in the
case of exports of unprocessed timber.
1
Be it enacted by the Senate and the House of Representatives of the United States
2
of America in Congress assembled,
SENT BY
5- 6-93 : 7:48AM
:
202 966 2554 4/10
2
1
SECTION 1. SHORT TITLE.
2
This Act may be cited as the 'American Timber Supply and Manufacturing
3
Incentives Act'.
4
SEC. 2. INVESTMENT INCENTIVE FOR DOMESTIC TIMBER PRODUCTION.
5
(a) In General - Part I of subchapter P of chapter 1 of the Internal Revenue C
6
ode of 1986 (relating to treatment of capital gains) is amended by adding at the end the
7
following new section:
8
'SEC. 1202. INVESTMENT INCENTIVE FOR DOMESTIC TIMBER PRODUCTION.
9
'(a) In General - At the election of any taxpayer who has qualified timber gain
10
for any taxable year, there shall be allowed as a deduction from gross income an amo
11
unt equal to the qualified percentage of such gain.
12
'(b) Qualified Timber Gain - For purposes of this section -
13
'(1) In general - The term 'qualified timber gain' means the lesser of -
14
'(A) the net capital gain for the taxable year, or
15
'(B) the net capital gain for the taxable year determined by taking
16
into account only gains and losses from qualified timber.
17
'(2) Qualified timber - The term 'qualified timber' means any timber with
18
respect to which the taxpayer has provided assurances (which are satisfactory to
19
the Secretary) that substantially all of the processing of the timber will occur
20
within the United States.
SENT BY:
5- 6-93 : 7:49AM ;
202
OOR
3
1
'(c) Qualified Percentage - For purposes of this section, the term 'qualified
2
percentage' means the percentage (not exceeding 30 percent) determined by multiplying-
3
'(1) 2 percent, by
4
'(2) the number of years in the holding period of the taxpayer with respect
5
to the timber.
6
'(d) Estates and Trusts . - In the case of an estate or trust, the deduction under
7
subsection (a) shall be computed by excluding the portion (if any) of the gains for the
8
taxable year from sales or exchanges of capital assets which, under sections 652 and 662
9
(relating to inclusions of amounts in gross income of beneficiaries of trusts), is includible
10
by the income beneficiaries as gain derived from the sale or exchange of capital assets.'
11
(b) Coordination With Existing Limitations
-
12
(1) Subsection (h) of section 1 of such Code (relating to maximum capital
13
gains rate) is amended by inserting after 'net capital gain' each place it appears the
14
following; '(other than qualified timber gain with respect to which an election is
15
made under section 1202)'.
16
(2) Subsection (a) of section 1201 of such Code (relating to alternative tax
17
for corporations) is amended by inserting after 'net capital gain' each place it
18
appears the following: '(other than qualified timber gain with respect to which an
19
election is made under section 1202)'.
SENT BY:
5- 6-93 : 7:49AM
000 707
4
1
(c) Allowance of Deduction in Computing Adjusted Gross Income. - Subsection
2
(a) of section 62 of such Code (relating to definition of adjusted gross income) is
3
amended by adding at the end the following new paragraph:
4
'(14) Investment incentive for domestic timber production. - The deduction
5
allowed by section 1202.'
6
(d) Conforming Amendment - The table of sections for part 1 of subchapter P
7
of chapter 1 of such Code is amended by adding at the end the following new item:
8
'Sec. 1202. Investment incentive for domestic timber production.'
9
(c) Effective Date - The amendments made by this section shall apply to sales
10
or exchanges after the date of the enactment of this Act.
11
SEC. 3. APPLICATION OF PASSIVE LOSS LIMITATIONS TO TIMBER
12
ACTIVITIES.
13
(a) Determination of Material Participation - Subsection (h) of section 469 of the
14
Internal Revenue Code of 1986 (defining material participation) is amended by adding at
15
the end the following new paragraph:
16
'(6) Treatment of timber activities
-
17
'(A) In general , - A taxpayer shall be treated as materially
18
participating in any timber activity for a taxable year if -
19
'(i) the taxpayer's participation in the activity for such year
20
constitutes substantially all of the participation in the activity of all
21
individuals for such year, other than individuals -
SENT BY:
5- 6-93 ; 7:49AM :
202 900
5
1
'(I) who are not owners of interests in the activity,
2
'(II) who are retained and compensated directly by the
3
taxpayer, and
4
'(III) whose activities are subject to the oversight.
5
supervision, and control of the taxpaycr, or
6
'(ii) based on all of the facts and circumstances, the taxpayer
7
participates in the activity on a regular, continuous, and substantial
8
basis during such year, except that for purposes of this clause -
9
'(I) the taxpayer shall not be required to participate in
10
the activity for any minimum period of time during such ye
11
ar, and
12
'(II) the performance of services by individuals who
13
are not owners of interests in the activity shall not be
14
considered if the services are routinely provided by
15
individuals specializing in such services and such services are
16
subject to the oversight, supervision, and control of the
17
taxpayer.
18
'(B) Partners and S corporation shareholders . - Subject to paragraph
19
(2), the determination of whether a partner or S corporation shareholder
20
shall be treated as materially participating in any timber activity of the
SENT BY:
5- 6-93 : 7:50AM :
202 966 2554,# O/IU
6
1
partnership or S corporation shall be based upon the combined participation
2
of all of the partners or shareholders in the activity.
3
'(C) Timber activity # - For purposes of this paragraph, the term
4
'timber activity' means the planting, cultivating, caring, cutting, or
5
preparation (other than milling) for market, of trees.'
6
(b) Effective Date - The amendment made by this section shall apply to taxable
7
years beginning after the date of the enactment of this Act.
8
SECTION 4. DENIAL OF CERTAIN EXPORT SUBSIDIES.
9
(a) Foreign Sales Corporations. - Paragraph (2) of section 927(a) of the Internal
10
Revenue Code of 1986 (relating to exclusion of certain property) is amended by striking
11
'or' at the end of subparagraph (C), by striking the period at the end of subparagraph
12
(D) and inserting ', or', and by adding at the end thereof the following:
13
'(E) any unprocessed timber.
14
For purposes of subparagraph (E), the term 'unprocessed timber' has the same meaning
15
as that given to it in the Customs and Trade Act of 1990, 104 STAT. 629.'
16
(b) Domestic International Sales Corporations. - Paragraph (2) of section 993(c)
17
of such Code (relating to exclusion of certain property) is amended by striking 'or' at the
18
end of subparagraph (C), by striking the period at the end of subparagraph (D) and
19
inserting ', or', and by adding after subparagraph (D) the following:
20
'(E) any unprocessed timber.
SENI
6-93 7:50AM
202 966 2554 9/10
7
1
For purposes of subparagraph (E), the term 'unprocessed timber' has the same
2
meaning as that given to it in the Customs and Trade Act of 1990, 104 STAT.
3
629.'
4
(c) Title-Passage Rule. - Subsection (b) of section 865 of such Code (relating to
5
source rules for personal property sales) is amended by adding at the end thereof the
6
following: "Notwithstanding the preceding sentence, any income from the sale of any
7
unprocessed timber which is a softwood and was cut from an area in the United States
8
shall be sourced in the United States and the rules of sections 862(a)(6) and 863(b) shall
9
not apply to any such income. For purposes of the preceding sentence, the term
10
unprocessed timber' has the same meaning as that given to it in the Customs and Trade
11
Act of 1990, 104 STAT. 629.'
12
(d) Elimination of Deferral. - Subsection (d) of section 954 of such Code is
13
amended by adding at the end thereof the following new paragraph:
14
'(4) Special rule for certain timber products. - For purposes of subsection
15
(a)(2), the term 'foreign base company sales income' includes any income (whether
16
in the form of profits, commissions, fees, or otherwise) derived in connection with
17
18
'(A) the sale of any unprocessed timber referred to in section 865(b),
19
or
20
'(B) the milling of any such timber outside the United States.
SENT BY:
5- 6-93 7:51AM ;
202 966 2554 #10/10
8
1
Subpart G shall not apply to any amount treated as subpart F income by reason of
2
this paragraph.'
3
(e) Effective Date. - The amendments made by this section shall apply to sales,
4
exchanges, or other dispositions after the date of the enactment of this Act.