James M. Jeffords: “today I am joining with four of my colleagues on the Finance Committee, Senators Conrad, Murkowski, Hatch and Breaux, to…”

“today I am joining with four of my colleagues on the Finance Committee, Senators Conrad, Murkowski, Hatch and Breaux, to introduce a bill that will eliminate an aspect of our tax laws that is fundamentally unfair to taxpayers with income from foreign sources. Under our system of taxation, United States citizens and domestic corporations are subject to tax on income they earn from sources outside the United States. In all likelihood, foreign-source income will also be subject to tax by the country where it was earned. Absent an Internal Revenue Code measure providing for other treatment, the same income could be taxed twice, by two different countries. The tax code does have a provision to address this problem of double taxation: the foreign tax credit. This credit allows taxpayers to offset otherwise payable U.S. taxes with foreign taxes paid on the same foreign-source income. Like the other provisions governing international taxation, the details of the foreign tax credit are complex. The basic principle underlying the credit, however, is simple: relief from double taxation. The alternative minimum tax, AMT, requires taxpayers to compute their taxes twice, once under the ``regular'' method, and once using the AMT calculation. As a rule, taxpayers pay the larger of these two computations. When taxpayers become subject to the AMT, th protection against double taxation is undermined.”