The American Jobs Creation Act of 2004 () was a federal
tax act that repealed the export tax incentive (ETI), which had been declared illegal by the
World Trade Organization
The World Trade Organization (WTO) is an intergovernmental organization that regulates and facilitates international trade. With effective cooperation
in the United Nations System, governments use the organization to establish, revise, and ...
several times and sparked
retaliatory tariffs by the
European Union
The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been de ...
.
It also contained numerous
tax credits
A tax credit is a tax incentive which allows certain taxpayers to subtract the amount of the credit they have accrued from the total they owe the state. It may also be a credit granted in recognition of taxes already paid or a form of state "disc ...
for agricultural and business institutions as well as the repeal of
excise taxes on both fuel and alcohol and the creation of tax credits for
biofuels.
The bill was introduced by Representative
Bill Thomas
William Marshall Thomas (born December 6, 1941) is an American politician. He was a Republican member of the United States House of Representatives from 1979 to 2007, finishing his tenure representing California's 22nd congressional district an ...
on June 4, 2004, passed the
House June 17, the
Senate on July 15, and was signed by President
George W. Bush
George Walker Bush (born July 6, 1946) is an American politician who served as the 43rd president of the United States from 2001 to 2009. A member of the Republican Party, Bush family, and son of the 41st president George H. W. Bush, he ...
on October 22.
Summary of provisions
The
Office of Tax Analysis
An office is a space where an organization's employees perform administrative work in order to support and realize objects and goals of the organization. The word "office" may also denote a position within an organization with specific dut ...
of the
United States Department of the Treasury
The Department of the Treasury (USDT) is the national treasury and finance department of the federal government of the United States, where it serves as an executive department. The department oversees the Bureau of Engraving and Printing and ...
summarized the tax changes as follows:
* created deduction for income from U.S. production activities
* repealed exclusion for extraterritorial income
* changed interest expense allocation rules
A report by the
Tax Policy Center
The Urban-Brookings Tax Policy Center, typically shortened to the Tax Policy Center (TPC), is a nonpartisan think tank based in Washington D.C. A joint venture of the Urban Institute and the Brookings Institution, it aims to provide independent ...
identifies the following main provisions and their costs over a period of 10 years:
* repeal of the ETI over a 3 year period including transitional relief; expected to produce $49 billion in revenue
* U.S. production tax breaks of 9% of income from domestic production, with an expected cost of $77 billion
* assorted business tax relief provisions costing $7 billion
* international tax changes for a cost of $43 billion
* miscellaneous revenue generating provisions with a projected gain of $82 billion
* temporarily allowed taxpayer deduction of state and local sales taxes
Another provision revised the definition of the term "covered expatriate" which sets net worth andi income tax liability thresholds used to determine if a person who renounces his/her U.S. citizenship must pay an
expatriation tax
An expatriation tax or emigration tax is a tax on persons who cease to be tax resident in a country. This often takes the form of a capital gains tax against unrealised gain attributable to the period in which the taxpayer was a tax resident of t ...
.
See also
*
Extraterritorial income exclusion Extraterritorial income exclusion, under the U.S. Internal Revenue Code, was the amount excluded from a taxpayer's gross income for certain transactions that generate foreign trading gross receipts. In general, foreign trading gross receipts inclu ...
*
Foreign Sales Corporation
Foreign Sales Corporation (FSC) was a type of tax device allowed under the United States Internal Revenue Code that allowed companies to receive a reduction in U.S. federal income tax for profits derived from exports.
The FSC was created in 198 ...
*
Domestic international sales corporation The domestic international sales corporation is a concept unique to tax law in the United States. In 1971, the U.S. Congress voted to use U.S. tax law to subsidize exports of U.S.-made goods. The initial mechanism was through a Domestic Internationa ...
References
External links
Full text of the Act
{{Authority control
United States federal taxation legislation
Acts of the 108th United States Congress
Presidency of George W. Bush
2004 in economics