U.S., exporters are stepping up their drive to save a controversial tax break for exports that the Carter administration is expected to slate for elimination in the tax overhaul plan it presents to Congress this fail.
The exporters argue that at a time when this country is running by far the largest trade deficit in its history - expected to reach $25 billion this year - it should not be thinking of doing away with the sole government incentive provided to exporters, the so-called DISC, or domestic international sales corporation.
The point was underlined at a news conference held today by the Special Committee for U.S. Exports, a group representing the country's major export firms.
"Unintentionally or otherwise, everything the government is doing is very negative from the exporter's standpoint." committee chairman David C. Garfield - who is also vice chairman of Ingersoll-Rand Co. - reporters. "Repeal of the DISC would be the last straw."
Carfield noted that, while most of the country's trade deficit was accounted for by the heavy level of oil imports. U.S. exports were not growing to the narrow the gap, but were staying flat and. in fact, had declined by 3 per cent in June.
He also criticized the recent drop in the dollar in relation to other currencies - a de facto devaluation which has been tacitly encouraged by the U.S. Treasury Department. He claimed that the cheaper dollar will not reduce the level of petroleum imports which are causing most of the problem and that it could cause more inflation if the oil exporting countries raise their price once more to recover lost purchasing power. At the same time, he predicted that U.S. exports would not get much of a boost from a cheaper dollar.
The special committe, meanwhile released the summary of a study it commissioned that defended the DISC as a needed incentive for companies selling abroad to offset alleged tax advantages provided by other governments to their exporters, and also as a valuable bargaining counter in the current round of international trade negotiations.
In recent congressional testimony.
Treasury Secretary W. Michael Blumenthal strongly criticized the DISC program - which is expected to cost the federal government $1.25 billion dollars this year in lost revenue - claiming it was hard to justify the revenue lost when it cannot be shown that the tax break actually encouraged exports.
In one of the debates in last year's presidential election campaign, President Carter also criticized the DISC as one program that costs the government tax revenues without providing any benefits in return.