Make Your Taxes Disappear!*

[Guest guest]

http://www.motherjones.com/news/feature/2005/03/corporate_tax_bill.html

 

Make Your Taxes Disappear!*

 

*Offer limited to cruise ship owners, shopping mall developers,

ceiling fan importers, natural gas distributors, and other

corporations with suitable K Street connections.

 

By Michael Scherer

 

March/April 2005 Issue

 

IN A SEASON OF campaign rallies and million-dollar ad buys, President

Bush opted for one decidedly understated ceremony. On October 22, just

11 days before the election, he boarded Air Force One to sign $137

billion in new tax breaks for corporate America, one of the largest

industry giveaways in two decades. This was his fifth major tax cut,

but this time there was no glad-handing, no photo op—just a

one-sentence press release. The president had nothing to brag about.

His signature expanded exactly the sort of tax avoidance he had railed

against at a campaign rally that morning: " The rich hire lawyers and

accountants for a reason when it comes to taxes, " Bush had told a

roaring audience at a hockey arena in Wilkes-Barre, Pennsylvania.

" That's to slip the bill, and stick you with it. "

 

It was an apt description of the vaingloriously named American Jobs

Creation Act of 2004. Though the law began as an effort to end a $5

billion-a-year corporate tax subsidy that had been declared illegal by

the World Trade Organization, it had grown into a hydra-headed beast.

The law's principal author, Ways and Means Committee chairman Bill

Thomas (R-Calif.), jokingly referred to it as " Miss Piggy " on the

House floor. Arizona Senator John McCain decried " the worst example of

the influence of special interests that I have ever seen. " The

president's own Treasury secretary, John Snow, bemoaned the myriad

" tax provisions that benefit few taxpayers. " Top White House

economists protested one new loophole that would cut $3 billion,

primarily from the taxes of pharmaceutical and high-tech companies,

without yielding " any substantial economic benefits. "

 

Almost every industry in America received special favors. The tax cuts

included half a billion for shipbuilders Northrop Grumman and General

Dynamics, $100 million for NASCAR racetrack owners, and $9 million for

arrow manufacturers. Importers of Chinese ceiling fans—like Home

Depot—got a break, as did energy companies angling to build a natural

gas pipeline in Alaska. About $231 million went to reduce the taxes of

shopping-mall developers in the states of key House and Senate

members. Four Texas companies received special dispensation to shelter

their profits in the Caribbean. The law also cut taxes on railroads,

coffee roasters, timber firms, and Hollywood studios. General Electric

received tax benefits worth more than $1 billion over the next decade.

 

" From the beginning to the end, this was designed by lobbyists, " says

C. Eugene Steuerle, codirector of the Urban-Brookings Tax Policy

Center, who spearheaded corporate tax reform as a member of the Reagan

Treasury in 1986. " The only question was whether this was the worst

tax bill in our lifetime or the worst tax bill in U.S. history. "

 

 

WHEN REPUBLICAN leaders took control of the House of Representatives a

decade ago, they vowed to end such legislative fiascoes. Unfettered

markets rather than government intervention, they proclaimed, would

determine Wall Street's winners and losers. In the Contract With

America, Republicans promised a return to " fiscal responsibility " and

to " end the cycle of scandal and disgrace " by which Democrats pandered

to special interests. But far from living up to this rhetoric, the GOP

leadership has presided over an explosion of new tax loopholes and

pork-barrel spending. " It's worse now than it was under the

Democrats, " says Stephen Moore, president of the archconservative Club

for Growth. " The Democrats invented the game, and Republicans

perfected it. "

 

Conservatives in Congress, especially, have seized upon tax policy as

a way of doling out favors to supporters while maintaining a facade of

" smaller government " ; tax breaks boost corporate bottom lines as

effectively as pork-barrel expenditures, without requiring the

Treasury to cut a check. Since 2000 alone, Wall Street's tax bills

have dropped by a third. As a percentage of the gross domestic

product, corporate taxes are now at their lowest level in 20 years—and

their second-lowest level since the Great Depression. Nearly 95

percent of corporations pay less than 5 percent of their income in

taxes. This despite a tax rate that officially stands at 35 percent.

 

" The corporate income tax bears no relation to income—it's a bunch of

special-interest provisions, " says Gary Hufbauer, a fellow at the

Institute for International Economics and a former tax policy analyst

in the Nixon, Ford, and Carter administrations. Corporate America, he

says, has gotten the message: Taxation is little more than punishment

for not promoting your interests on Capitol Hill. " If you do not

lobby, " says Hufbauer, " you are going to get taxed. "