In case you didn’t hear, Congress just let 55 tax breaks expire on December 31. Known as “tax extenders,” they cost about $50 billion per year. Most of them are special-interest boondoggles that benefit corporate America. (Just a few are low-cost ones that benefit working Americans.)
Congress renews these breaks every year or two after heavy arm twisting from corporations and their trade groups. There’s a whole lobbying industry built up around keeping their nests feathered with these tax cuts.
Not only do they win these lucrative tax breaks from their friends in Congress – they don’t even have to pay for them. Typically, Congress funds them by increasing the deficit.
Meanwhile, some leaders in Congress demand $40 billion in cuts to Food Stamps to reduce the deficit. They block extending emergency unemployment benefits for 1.3 million Americans unless it’s PAID FOR.
But they don’t ask their friends at General Electric to pay for a tax break known as the “active financing exception,” which lets them and Wall Street banks shift their profits to foreign subsidiaries in order to avoid paying their fair share to Uncle Sam.
This tax break lets corporations avoid paying taxes to any nation on their financial income earned by foreign subsidiaries, so long as those profits remain offshore. All they have to do is claim that their U.S.-based financing income is actually being earned in offshore tax havens. We call it the GE Tax Loophole because it is a primary reason the company has succeeded in getting a tax refund from the U.S. government in at least three recent years. Citigroup likes it, too. But the rest of us shouldn’t like it: Our country loses $11 billion in tax revenue every two years to it.
Congress is used to rubber-stamping these tax breaks on a bipartisan basis. This year it’s time to say no. We need to kill the GE Tax Loophole. And if corporations want these other tax goodies that just expired they need to pay for them by closing other tax loopholes – not by making the rest of us pick up the tab.