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Taxwriters' Letter to Archer and Rangel Opposing Tracking Stock Tax

MAY 6, 1999

Taxwriters' Letter to Archer and Rangel Opposing Tracking Stock Tax

DATED MAY 6, 1999
DOCUMENT ATTRIBUTES
  • Authors
    McInnis, Rep. Scott
    Houghton, Rep. Amo
    Cardin, Rep. Benjamin L.
    English, Rep. Phil
    Shaw, Rep. E. Clay, Jr.
    McCrery, Rep. Jim
    Johnson, Rep. Nancy L.
    Matsui, Rep. Robert T.
    Levin, Rep. Sander M.
    Dunn, Rep. Jennifer
    Weller, Rep. Jerry
    Camp, Rep. Dave
    Foley, Rep. Mark
    Kleczka, Rep. Gerald D.
    Neal, Rep. Richard E.
    Lewis, Rep. John
    Hulshof, Rep. Kenny C.
    Portman, Rep. Rob
    Watkins, Rep. Wes
    Collins, Rep. Mac
    Thurman, Rep. Karen L.
    McDermott, Rep. Jim
    Coyne, Rep. William J.
    Herger, Rep. Wally
  • Institutional Authors
    House of Representatives
    Ways and Means Committee
  • Cross-Reference
    For related coverage, see the Tax Notes Today Table of Contents for

    May 25, 1999.
  • Code Sections
  • Subject Area/Tax Topics
  • Index Terms
    liquidations, complete subsidiary, nonrecognition
    financial products
    legislation, tax
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 1999-18537 (2 original pages)
  • Tax Analysts Electronic Citation
    1999 TNT 100-96

 

=============== FULL TEXT ===============

 

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
DOCUMENT ATTRIBUTES
  • Authors
    McInnis, Rep. Scott
    Houghton, Rep. Amo
    Cardin, Rep. Benjamin L.
    English, Rep. Phil
    Shaw, Rep. E. Clay, Jr.
    McCrery, Rep. Jim
    Johnson, Rep. Nancy L.
    Matsui, Rep. Robert T.
    Levin, Rep. Sander M.
    Dunn, Rep. Jennifer
    Weller, Rep. Jerry
    Camp, Rep. Dave
    Foley, Rep. Mark
    Kleczka, Rep. Gerald D.
    Neal, Rep. Richard E.
    Lewis, Rep. John
    Hulshof, Rep. Kenny C.
    Portman, Rep. Rob
    Watkins, Rep. Wes
    Collins, Rep. Mac
    Thurman, Rep. Karen L.
    McDermott, Rep. Jim
    Coyne, Rep. William J.
    Herger, Rep. Wally
  • Institutional Authors
    House of Representatives
    Ways and Means Committee
  • Cross-Reference
    For related coverage, see the Tax Notes Today Table of Contents for

    May 25, 1999.
  • Code Sections
  • Subject Area/Tax Topics
  • Index Terms
    liquidations, complete subsidiary, nonrecognition
    financial products
    legislation, tax
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 1999-18537 (2 original pages)
  • Tax Analysts Electronic Citation
    1999 TNT 100-96
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