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Report No: 543
Date: 12/07/2000

OMB COST ESTIMATE
FOR PAY-AS-YOU-GO CALCULATIONS

  1. LAW NUMBER: P.L.106-519 (H.R. 4986)

  2. BILL TITLE: FSC Repeal and Extraterritorial Income Exclusion Act

  3. BILL PURPOSE: Repeals the foreign sales corporation (FSC) tax provisions of the Internal Revenue Code to comply with World Trade Organization (WTO) rules and provides an exclusion from U.S. tax for certain income earned overseas.

  4. OMB ESTIMATE: P.L. 106-519 repeals the FSC tax provisions of the Internal Revenue Code that the WTO ruled were a prohibited export subsidy. In the absence of the repeal, the United States would have faced WTO-approved sanctions. P.L. 106-519 also excludes certain extraterritorial income from gross income for U.S. tax purposes. OMB estimates that revenues will be $1.9 billion less over the years 2001through 2005 as the result of these changes.
    5. (Fiscal years; in millions of dollars)
    2000 2001 2002 2003 2004 2005
    Revenues...................................... 0 -330 -355 -380 -405 -430

     

  5. CBO ESTIMATE:
    6. (Fiscal years; in millions of dollars)
    2000 2001 2002 2003 2004 2005
    Revenues.................................... 0 -153 -315 -348 -384 -423

     

  6. EXPLANATION OF DIFFERENCES BETWEEN OMB AND CBO ESTIMATES:

    7. The difference between OMB and CBO estimates is the result of different baselines and estimating models.

  7. CUMULATIVE EFFECT OF DIRECT SPENDING AND REVENUE LEGISLATION ENACTED TO DATE:
    8. (Fiscal years; in millions of dollars)
    2000 2001 2002 2003 2004 2005
    Outlay effect.............. 34 1,399 2,473 7,112 7,845 8,039
    Receipt effect............ -8 -1,082 -1,193 -1,278 -1,334 -1,354
    Net costs.................... 42 2,481 3,666 8,390 9,179 9,393

    NOTE: The cumulative effect of direct spending and revenue legislation enacted to date is currently estimated to result in an end-of-session sequester. The Administration looks forward to working with the Congress to ensure that an unintended sequester does not occur.