A great thing happened at the end of 2013: A pack of corporate tax breaks that long ago should have been weeded out of the tax code finally expired due to congressional inaction and were dispatched to the graveyard of tax inequity.
But today, as millions of Americans rush to file their taxes before tonight’s midnight deadline, corporate lobbyists are digging up the graveyard and working to bring these tax breaks back from the dead.
These are the very tax breaks that enable major corporations to earn billions in profits while paying little or no taxes – or, in some cases, get big payouts.
Take General Electric, the company that used to say “we bring good things to life.” What it’s trying to bring to life now is a tax loophole that allowed it to not only pay zero income taxes in the past five years on profits of $28 billion, but actually enabled it to receive checks from federal taxpayers totaling $3 billion, according to the group Americans for Tax Fairness.
Today is a good day to tell Congress to stop trying to revive these tax zombies. The Campaign for America’s Future has partnered with 10 organizations that together are calling on Congress to end the corporate tax giveaways. Sign the petition here.
In Capitol-Hill-speak what’s at stake are called “tax extenders,” even though what’s being extended are exemptions from taxes. Not all of these extenders are aimed at corporations, and not all of them are nefarious. But the benefits of these extenders go overwhelmingly to corporations, according to a Joint Committee on Taxation analysis, and reviving them takes us further away from a truly fair, progressive tax system.
These provisions include two expired offshore tax loopholes that would cost taxpayers $90 billion over the next 10 years.
One is the “active financing exception” that allows companies to avoid paying taxes on earnings from financing operations by attributing the earnings to offshore tax havens. GE has a big financial services component and it’s been one of the companies that has been fighting aggressively to keep this loophole on the books.
The other is the “controlled foreign corporations (CFC) look-through rule” that allows multinational corporations to create “stateless” income that is earned in the United States but laundered through a low-tax or no-tax country. A good example of this is the “double Irish with a Dutch sandwich,” which is not a meal-and-drink combo at Applebee’s but a tax-avoidance technique used by Google, Apple and other large companies to divert profits through subsidiaries in Ireland, Bermuda and the Netherlands to avoid taxation. There are variants to the “double Irish,” but the effect is the same: to keep money earned in the United States out of the reach of tax collectors.
What is especially absurd is that, as Americans for Tax Fairness uncovered in a recent report with Public Campaign, GE spends more money on lobbying Congress than it pays in federal taxes. Well, from GE’s standpoint, it’s not absurd at all: For every $1 GE spends lobbying, it gets $24 in cash from the IRS, based on its $130 million in lobbying expenses and tax refunds of $3.1 billion from 2008 to 2012.
Altogether, the report says, there are 1,359 lobbyists working on resurrecting these zombie tax breaks. While these lobbyists work to revive these tax breaks, conservatives in Congress are asking financially struggling individuals and families to sacrifice nutrition assistance, health care and other government services because “we can’t afford it.” What we can’t afford is these corporations using these schemes to dodge paying their fair share of taxes.
If you are a married wage-earner with one child and an income of $60,000 a year, you probably paid about 17 percent of your income in federal taxes. It’s not fair that a company that earns billions in profits in the United States can get away with paying nothing, or next to nothing. It’s certainly wrong to give corporations a tax incentive to ship jobs and operations overseas. You pay taxes on every dollar you earn in the United States, and so do most of our Main Street businesses. Big corporations should do the same. Add your name to the effort to tell Congress to stop the corporate tax giveaways.