Doggett’s tax proposal in farm bill appears ‘D.O.A.’



By Jessica Holzer

A tax proposal by Rep. Lloyd Doggett (D-Texas) that sparked a GOP revolt and nearly scuttled the farm bill last year now looks to be dead.

In a letter to stakeholders in the farm legislation over the weekend, the House Agriculture Committee chairman and ranking member, Collin Peterson (D-Minn.) and Bob Goodlatte (R-Va.), wrote that they are working toward a compromise bill “that can pass both chambers and that the president will sign.”

The so-called Doggett provision, which would have raised taxes on overseas companies with U.S. subsidiaries, does not appear to pass this test as the Bush administration has threatened to veto farm legislation that contains any tax increases.

“Doing this without tax increases has been the focal point of [Peterson’s] discussions with the Senate and the administration, and the sessions that I’ve been involved with as well,” Goodlatte said Tuesday.

Rep. Mike Conaway (R-Texas), a fierce opponent of the Doggett provision who sits on the Agriculture Committee, called this sort of tax increase “D.O.A.”

“They need to find something other than tax increases, and that’s what this provision is,” Conaway said.

The $3.7 billion provision provoked an outcry from Republicans when Democrats attached it and other tax provisions to the farm bill in July without committee approval or hearings.

Goodlatte called the move a betrayal. Minority Leader John Boehner (R-Ohio), citing the tax increases, whipped his Republicans against the bill. All told, 177 Republicans voted against the legislation, normally a routine reauthorization that attracts ample bipartisan support.

The provision also stirred concerns in the upper chamber, where a bipartisan group of 11 senators wrote to the chairman and ranking member of the Agriculture Committee, Sens. Tom Harkin (D-Iowa) and Saxby Chambliss (R-Ga.), that it could override international tax treaties.

The provision never caught fire in the Senate, where the Finance Committee attached other revenue raisers to the legislation. The two chambers also approved different language on farm subsidies and other spending programs, which will need to be reconciled before the farm law expires on March 15.

In their letter, Peterson and Goodlatte wrote, “We do not believe that any strategy involving a veto will be good for the country. We encourage everyone involved in this process to look realistically at what can be accomplished.”

On Tuesday, Doggett said that he’s not wedded to any particular revenue raiser, including the one he sponsored in the House bill, but remained intent on making sure the spending increases in the farm bill were fully offset under pay-go budget rules.

He said that he would fully support a $10 billion revenue raiser in the Senate bill that would cut down on transactions solely designed to trim firms’ tax bills. Doggett said he had helped to craft the provision in the House some time ago and would be pleased to see it adopted in the final bill.

However, the administration has said it would veto legislation with this language.

Critics of the Doggett provision argue that it would scare away overseas businesses from investing in the U.S. and cause retribution against U.S. firms with overseas operations. The National Association of Manufacturers lobbied against the provision, saying it would hurt their members.

“If the president wouldn’t sign an SCHIP extension with tobacco tax increases in it, he’s not going to like a tax increase on foreign companies creating jobs in the U.S.,” Conaway said, referring to last year’s debate on expanding the children’s health insurance law.

Doggett billed his provision as a legitimate way to pay for a $4 million expansion in federal nutrition programs, saying it targets foreign businesses setting up sham companies to take advantage of favorable tax treaties.

In a statement before the House vote on the farm legislation last summer, he said a vote against the provision would benefit “CEOs who hold beach-side board meetings at the expense of nutrition programs to feed the less fortunate here at home.”

On Tuesday, Doggett said that, based on an exchange that he had with Treasury Secretary Henry Paulson at a hearing last week about separate tax legislation, he believes the administration will frown on any tax change in the farm bill.

“I think it’s clear that the administration, as best as I can determine, is opposed to any revenue provision even if it is revenue-neutral,” he said.