corporate tax breaks: how congress rigs the rules

[xchrom]

http://www.nationofchange.org/corporate-tax-breaks-how-congress-rigs-rules-1398779456

“The game is rigged and the American people know that. They get it right down to their toes.”

— Senator Elizabeth Warren

This week, the House Ways and Means Committee is poised to demonstrate exactly how the rules are rigged. On Tuesday, the committee will begin to mark up a series of corporate tax breaks – known as “extenders” because they have been extended regularly every year or two for over a decade. Only now the committee plans to make many of them permanent, at the cost of an estimated $300 billion over 10 years. And it does not plan to pay for them by closing other corporate loopholes or raising rates. The giveaway – almost all of which goes to corporations – will simply add to the deficit, no doubt fueling the later demands of those who vote for them for deeper cuts in programs for the vulnerable in order to bring “spending” under control.

The tax measures range from big to small, sensible to inane. Two centerpieces are glaring loopholes for multinational companies and banks, encouraging them to ship jobs and report profits abroad to avoid an estimated $80 billion in taxes over a decade.

Call them – one known as the “active finance exception” and the other as the “CFC look-through rule” – the General Electric tax dodges. The loopholes allow multinationals with huge finance arms, like General Electric or Wall Street banks, to dodge paying their fair share of taxes simply by claiming that U.S. based financial income is being generated offshore. These “exceptions” are central to how GE managed to declare a profit of more than $27 billion over the past five years, while not only paying nothing in taxes, but pocketing tax refunds of more than $3 billion. The multibillion-dollar multinational pays less in taxes than any mom and pop store that turned a profit. These breaks don’t pass the smell test.


Making these permanent without offsetting them by closing other loopholes is a brazen insult to American voters. Republicans have railed incessantly about deficits, forcing austerity budgets that have impeded the recovery and cost jobs. They have even refused to pass emergency unemployment compensation for long-term unemployed workers unless it was “paid for” by cuts elsewhere. (And even after the Senate passed the measure with “pay-fors,” Republican House Speaker John Boehner still refuses to allow it to come to a vote.)