[Mb-civic] NYTimes.com Article: Congress Gives Away the Store

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Congress Gives Away the Store

October 12, 2004
 


 

With its giveaways for Nascar, ceiling fan companies and
foreigners who bet on the ponies, it's easy to ridicule the
corporate tax bill that cleared Congress yesterday and is
now ready for President Bush's signature. But there's a
much bigger joke on taxpayers: among the some $140 billion
in new corporate tax cuts is some truly terrible tax
policy. 

The bill started life as a simple fix of an American export
subsidy that had been ruled unfair by the World Trade
Organization. Instead of just repealing what amounted to a
$50 billion subsidy for manufacturers here - and using the
money to, say, reduce the deficit - Congress has replaced
it with $77 billion in new tax breaks, much of it for
companies that never qualified for the export subsidy. The
bill allows nonmanufacturers, like ExxonMobil and other oil
and gas concerns, to get the new breaks by redefining their
activities as "manufacturing." 

That was just the beginning. United States companies with
overseas operations won an additional $43 billion in
various new tax breaks. General Electric is the biggest
presumptive winner from a provision that allows it to use
tax credits earned in offshore manufacturing operations to
offset profits from its financial services arm. And,
starting soon, companies that have amassed billions in
overseas profits - high-tech firms like Hewlett-Packard and
drug companies like Eli Lilly - will be treated to a
one-year tax holiday, during which they can repatriate
their foreign profits while paying only a fraction of the
tax they would otherwise owe. 

Many Congressional supporters of the bill parroted the
administration's line that more tax cuts would generate
jobs. We know that approach hasn't worked, especially for
manufacturing. It's time to try something new, not to
persist in what has failed. The bill's backers claim that
it's paid for by ending various tax shelters and requiring
the expiration of many "temporary" provisions. We've heard
that one before, too. The Internal Revenue Service is bad
at policing tax avoidance by multinationals, and, in
practice, temporary provisions are usually extended. The
Center on Budget and Policy Priorities estimates that
extending such temporary provisions would cost nearly $80
billion over 10 years. 

In our time of war and deficits, Congress should be ashamed
to have passed this bill, and the president should be
ashamed to sign it. 

http://www.nytimes.com/2004/10/12/opinion/12tue3.html?ex=1098605481&ei=1&en=ebc8f90ea928c995


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