Top Bush Official says Fix Tax Code to Avoid Europe Trade War: The Bush administration sent its big guns to Congress in July to urge legislators to fix part of the tax code to avoid a U.S.-European Union trade war.
The sticking point is the “foreign sales corporation” tax program, which allows U.S. companies that do business overseas to shield between 15 percent and 30 percent of their export income from U.S. taxes. This adds up to an annual break of nearly $5 billion for U.S. firms. In 2001, the World Trade Organization ruled the measure an illegal subsidy, and authorized the EU to impose $4 billion in sanctions on U.S. goods and services.
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