Taxwriters' Letter to Archer and Rangel Opposing Tracking Stock Tax
Taxwriters' Letter to Archer and Rangel Opposing Tracking Stock Tax
- AuthorsMcInnis, Rep. ScottHoughton, Rep. AmoCardin, Rep. Benjamin L.English, Rep. PhilShaw, Rep. E. Clay, Jr.McCrery, Rep. JimJohnson, Rep. Nancy L.Matsui, Rep. Robert T.Levin, Rep. Sander M.Dunn, Rep. JenniferWeller, Rep. JerryCamp, Rep. DaveFoley, Rep. MarkKleczka, Rep. Gerald D.Neal, Rep. Richard E.Lewis, Rep. JohnHulshof, Rep. Kenny C.Portman, Rep. RobWatkins, Rep. WesCollins, Rep. MacThurman, Rep. Karen L.McDermott, Rep. JimCoyne, Rep. William J.Herger, Rep. Wally
- Institutional AuthorsHouse of RepresentativesWays and Means Committee
- Cross-ReferenceFor related coverage, see the Tax Notes Today Table of Contents for
- Code Sections
- Subject Area/Tax Topics
- Index Termsliquidations, complete subsidiary, nonrecognitionfinancial productslegislation, tax
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 1999-18537 (2 original pages)
- Tax Analysts Electronic Citation1999 TNT 100-96
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May 6, 1999
The Honorable Bill Archer
Chairman
Committee on Ways and Means
1102 Longworth House Office Building
Washington, D.C. 20515
The Honorable Charles Rangel
Ranking Member
Committee on Ways and Means
2354 Rayburn House Office Building
Washington, D.C. 20515
Dear Chairman Archer and Ranking Member Range:
[1] The Administration's FY 2000 budget contains a new proposal to tax the issuance of tracking stock. We oppose this new tax.
[2] Specifically, the Administration proposes that a company's issuance of its corporate stock to raise capital be taxed as if the company had sold a portion of its assets in cases where the investor receives shares that track a division of a company rather than the company as a whole. Such a tax would constitute a significant shift in tax policy and be the first and only direct tax on the issuance of stock.
[3] The Administration has failed to explain why investments in companies that offer stocks that track their various divisions -- and only these companies -- should be taxed an the capital they raise. Companies use tracking stock for compelling business reasons ranging from raising capital efficiently to grow or acquire businesses, to attracting and retaining employees, to satisfying investors' demands. Issuers of tracking stock all share a common interest in optimizing the value of a corporation's business assets.
[4] We believe that Congress and the Administration should be encouraging investments in new businesses, and in restructuring existing businesses to enhance their value, rather than taxing these activities. We know of no identified abuses of tracking stock, and therefore there is simply no reason for imposing this new tax. In fact, the Treasury Departments failure to use its long-standing regulatory authority, under Section 337(d), to curb any activities in this area implicitly recognizes the non-abusive nature of tracking stock. We therefore urge you to reject the Administration's proposal and to provide positive assurances to issuers and the equity markets that tracking stock will remain a viable corporate financial instrument not subjected to unfair tax treatment relative to other equity security instruments.
[5] We appreciate your interest and attention to this issue and look forward to working with you to develop tax legislation that best serves our nation's economic and competitive interests.
Sincerely,
Rep. Scott McInnis
Rep. Amo Houghton
Rep. Benjamin L. Cardin
Rep. Phil English
Rep. E. Clay Shaw, Jr.
Rep. Jim McCrery
Rep. Nancy L. Johnson
Rep. Robert T. Matsui
Rep. Sander M.Levin
Rep. Jennifer Dunn
Rep. Jerry Weller
Rep. Dave Camp
Rep. Mark Foley
Rep. Gerald D. Kleczka
Rep. Richard E. Neal
Rep. John Lewis
Rep. Kenny C. Hulshof
Rep. Rob Portman
Rep. Wes Watkins
Rep. Mac Collins
Rep. Karen L. Thurman
Rep. Jim McDermott
Rep. William J. Coyne
Rep. Wally Herger
- AuthorsMcInnis, Rep. ScottHoughton, Rep. AmoCardin, Rep. Benjamin L.English, Rep. PhilShaw, Rep. E. Clay, Jr.McCrery, Rep. JimJohnson, Rep. Nancy L.Matsui, Rep. Robert T.Levin, Rep. Sander M.Dunn, Rep. JenniferWeller, Rep. JerryCamp, Rep. DaveFoley, Rep. MarkKleczka, Rep. Gerald D.Neal, Rep. Richard E.Lewis, Rep. JohnHulshof, Rep. Kenny C.Portman, Rep. RobWatkins, Rep. WesCollins, Rep. MacThurman, Rep. Karen L.McDermott, Rep. JimCoyne, Rep. William J.Herger, Rep. Wally
- Institutional AuthorsHouse of RepresentativesWays and Means Committee
- Cross-ReferenceFor related coverage, see the Tax Notes Today Table of Contents for
- Code Sections
- Subject Area/Tax Topics
- Index Termsliquidations, complete subsidiary, nonrecognitionfinancial productslegislation, tax
- Jurisdictions
- LanguageEnglish
- Tax Analysts Document NumberDoc 1999-18537 (2 original pages)
- Tax Analysts Electronic Citation1999 TNT 100-96