Virtually the first order of business for Congress after November’s Congressional election was to pass $42 billion in tax breaks going largely to corporations. The House has already approved these giveaways (without providing the “pay fors” they’ve demanded for bills to help average Americans like unemployment extensions or even disaster relief) and the Senate is expected to follow suit this week. Incredibly, it could have been much worse as the House originally wanted ten times more in corporate giveaways. A veto threat from President Obama is all that derailed that plan. Bill Moyers detailed the original package:
“The 10-year, $444 billion package includes a few provisions that were popular with Democrats, but would phase out existing tax credits for clean energy development. Mostly, it’s a boon for some of the top corporate tax-avoiders in America. Some 90 percent of the cuts would benefit their bottom lines. One of the biggest beneficiaries would be GE, which, according to Citizens for Tax Justice, claimed tax refunds of $3.1 billion on $27.5 billion in profits between 2008 and 2012. That means the company had a negative tax rate of 11 percent. Other big winners would include Wall Street financial firms, pharmaceutical companies and computer and Internet businesses.”
Frank Clemente, executive director of Americans for Tax Fairness, highlights one especially outrageous provision in this legislation:
“The most disturbing part of this legislation is it provides $6.2 billion in tax breaks to companies that ship profits offshore. One of these loopholes – the Active Financing exception, otherwise known as the GE Loophole – benefits General Electric and big Wall Street banks. Congress should be closing offshore tax loopholes, not continuing them.”
Citizens for Tax Justice offered this analysis:
Here are just a few of the problems with H.R. 5771:
? Most of the tax breaks fail to achieve any desirable policy goals. For example, they include bonus depreciation breaks for investments in equipment that the Congressional Research Service have found to be a “relatively ineffective tool for stimulating the economy,[1] a tax credit for research defined so loosely that it includes the work soft drink companies put into developing new flavors,[2] and a tax break that allows General Electric to do financial business offshore without paying U.S. taxes on the profits.
? The tax breaks cannot possibly be effective in encouraging businesses to do anything because they are almost entirely retroactive. The tax breaks actually expired at the end of 2013 and this bill will extend them (almost entirely retroactively) through 2014. These tax provisions are supposedly justified as incentives for companies to do things Congress thinks are desirable, like investing in equipment or research, but that justification makes no sense when tax breaks are provided to businesses for things they have done in the past.
? The bill increases the deficit by $42 billion to provide tax breaks that mostly benefit businesses, even after members of Congress have refused to enact any measure that helps working people unless the costs are offset. The measures that Congress refused to enact without offsets include everything from creating jobs by funding highway projects[3] to extending emergency unemployment benefits.[4]
As we’ve said before, budgeting is all about priorities. Did you cast your vote in November supporting candidates who promised to drain billions of dollars from federal revenues for America’s largest corporations, while simultaneously claiming our nation can’t afford programs benefiting average Americans like Social Security and Medicare?
Probably not. However, that’s exactly the course currently being charted in the lame duck and beyond to the 114th Congress.