Dow Jones Newswires

By Rob Wells
May 8, 2003

WASHINGTON -- The $550 billion tax cut bill moving through the House of Representatives would deny an intended dividend tax break to non-U.S. companies such as DaimlerChrysler (DCX) and Nestle SA (Z.NES).

The bill, sponsored by House Ways and Means Chairman Bill Thomas, R-Calif., would cut to 15% the maximum tax rate individuals pay on corporate dividends. That's about a 60% reduction from the current maximum of 38.6%. The lower rate wouldn't apply to dividends of non-U.S. corporations, a decision made to reduce the cost of the tax bill.

The bill, scheduled to reach the House floor Friday, came under criticism Wednesday by the Organization for International Investment, a trade association representing overseas firms operating in the U.S.

Todd Malan , the group's executive director, said the provision is an effective tax hike on the U.S. investors who own $1.5 trillion of foreign equities.
"There are millions of Americans who have been told by their financial advisers to diversify their portfolios and they're going to take a tax hit because they followed that advice," Malan said.
Malan said the bill, if it becomes law, would hurt the ability of U.S. stock markets to attract listings of foreign companies.

Copyright 2003 Dow Jones Newswires