Foreign subsidiaries of banks would get a tax break under a bill recently offered in the Senate.
Sens. Orrin G. Hatch, R-Utah, and Max S. Baucus, D-Mont., have introduced a bill that would not tax profits from the foreign units of banks and other financial services firms until the earnings are repatriated. The measure is expected to save financial firms as much as $100 million a year.
Congress enacted a similar tax break last year that expires Dec. 31. President Clinton tried to strike the provision using the line-item veto, but the Supreme Court recently declared that authority unconstitutional.
The latest proposal would make the tax break permanent, but lawmakers ultimately are expected to limit it to no more than two additional years to ensure it does not overly drain government coffers.
Under pressure from the Treasury Department, the senators tightened up language in the current law requiring financial firms to conduct most of their business in the foreign country in which a subsidiary is based, a Senate staff member said.