Statement of Administration Policy: S. 2238 - Technical Corrections Act of 1988

(Revised - LA)

(Senate)
(Bentsen (D) Texas and Packwood (R) Oregon)

The Administration believes that S. 2238, as it would be modified by a proposed Finance Committee amendment, makes significant progress toward the enactment this year of technical corrections legislation. The enactment of such legislation is essential, both to alleviate taxpayer uncertainty and to ensure that the intent of Congress in enacting the Tax Reform Act of 1986 and other recent tax legislation is carried out fully.

S. 2238 contains many improvements over the House technical corrections bill. Although further improvements are needed, the Administration believes that S. 2238 may provide a sound foundation for technical corrections legislation.

S. 2238 appropriately rejects ill-conceived tax increases included in the House-passed technical corrections legislation, such as repeal of the completed contract method of accounting and reduction in the dividends-received deduction. In addition, the Administration supports the provisions in S. 2238 that would: repeal the limitation on the Treasury's long-term bond authority; relieve farmers and certain other exempt users of diesel fuel from the burden of current collection procedures for the diesel fuel tax; and adopt a domestic election mechanism necessary for implementation of the pending United States-Bermuda tax treaty.

The Administration is concerned, however, that S. 2238 includes numerous revenue-losing and other measures that are neither well-founded in policy nor true techriical corrections. The inclusion of these measures threatens to create a technical corrections bill of unacceptably large size and scope and divert revenues from such important matters as the tax credit and allocation rules for research and experimentation and relief from the two percent floor for mutual fund shareholders.

The Administration supports an amendment to the bill to provide that organizations deriving a significant portion of their gross receipts from the performance of abortions, other than abortions where the life of the mother would be endangered if the fetus were carried to term, not be exempt from Federal taxation. Abortions deny unborn Americans the most precious of civil rights — the right to life. The Federal Government should not subsidize abortions through an exemption in the tax code.