SHIPPING TAX REFORM BILL INTRODUCED IN HOUSE, SENATE

   A five-point tax reform program aimed at retaining vessels under the
U.S. flag, and revitalizing the U.S. merchant marine and shipbuilding
industries has been introduced in both Houses of Congress
   The proposed legislation expands the scope of the Maritime
Administration’s Capital Construction Fund to increase the amount of
capital to build vessels in U.S. shipyards.  The bill removes caps on
earnings from U.S.-flag shipping operations and duties arising from foreign ship repairs that are deposited into the CCF. Money deposited into the CCF is tax-free until it is removed to be used for the construction of U.S. vessels in U.S. shipyards.
   The bill also removes the requirement for U.S.-flag lines to depreciate
vessels over a 10-year period. U.S.-flag ships in international commerce
would instead be allowed to fully depreciate in the year a vessel is
acquired and documented under the U.S. flag.
   The bill removes the alternative minimum tax on shipping income earned from the operation of U.S.-flag vessels in the foreign trades.
   The foreign-source income tax exclusion applied to other Americans
working outside the United States would be extended to U.S. seafarers
working aboard U.S. flag ships in international commerce. Approximately $75,000 of their yearly income would be tax-free. This would reduce the cost of hiring U.S. merchant mariners.
   The legislation is being sponsored in the Senate by Sen. John Breaux,
D-La., and in the House by Reps. Jim McCrery, R-La. and William Jefferson, D-La.
    The bill sponsors will request the Senate Finance Committee and the
House Ways and Means Committee to hold hearings on the legislation early next year.