THIS was just posted over at Naked Capitalism in the past hour, and it’s both an eye-opener and a must-read for those interested in a reality-based review of some of the more obscure aspects of the Fiscal Cliff bill, just passed by the Senate and up for a vote, this evening in the House.
You see, as outlined and estimated for us by Matt Stoller, over at Naked Capitalism tonight, there are $205 billion in corporate tax giveaways and related subsidies in the legislation currently in front of the House. And, as I'm posting it I'm hearing the legislation just passed in a vote there.
Just so we’re clear what’s going on here, upon passage of this bill and a signoff by the President, virtually everyone in America receiving a paycheck with an income under $113,700 will face an automatic 2% payroll tax hike, as I noted in a post this morning; and (per Stoller) corporate America will receive a $205 billion giveaway.
Here’s the intro paragraph from Stoller…
Eight Corporate Subsidies in the Fiscal Cliff Bill, From Goldman Sachs to Disney to NASCAR
Matt Stoller
Naked Capitalism
January 1st, 2013 8:57 PM
Throughout the months of November and December, a steady stream of corporate CEOs flowed in and out of the White House to discuss the impending fiscal cliff. Many of them, such as Lloyd Blankfein of Goldman Sachs, would then publicly come out and talk about how modest increases of tax rates on the wealthy were reasonable in order to deal with the deficit problem. What wasn’t mentioned is what these leaders wanted, which is what’s known as “tax extenders”, or roughly $205B of tax breaks for corporations. With such a banal name, and boring and difficult to read line items in the bill, few political operatives have bothered to pay attention to this part of the bill. But it is critical to understanding what is going on…
According to Naked Capitalism’s read of the legislation:
--NASCAR will get $43 million in tax subsidies over a two-year period to build racetracks and facilities (Sec. 312);
--“Certain railroads” will receive approximately $165 million a year for track maintenance (Sec. 306);
--Hollywood film studios will continue to receive a “straightforward subsidy,” which is comprised of an “extension of special expensing rules for certain film and television productions.” According to Naked Capitalism, this was worth $150 million in 2010 and 2011 (Sec. 317);
--Mining companies will receive tax incentives for safety equipment for miners, and for costs related to mine safety training for their employees (Sec. 307 and 316);
(As Matt Stoller commented in tonight’s Naked Capitalism piece: “Taxpayers shouldn’t have to bribe mining companies to not kill their workers.”)
And, saving the worst "best" for last, here are some of the more noteworthy items…
…Subsidies for Goldman Sachs Headquarters – Sec. 328 extends “tax exempt financing for York Liberty Zone,” which was a program to provide post-9/11 recovery funds. Rather than going to small businesses affected, however, this was, according to Bloomberg, “little more than a subsidy for fancy Manhattan apartments and office towers for Goldman Sachs and Bank of America Corp.” Michael Bloomberg himself actually thought the program was excessive, so that’s saying something. According to David Cay Johnston’s The Fine Print, Goldman got $1.6 billion in tax free financing for its new massive headquarters through Liberty Bonds.
…$9B Off-shore financing loophole for banks – Sec. 322 is an “Extension of the Active Financing Exception to Subpart F.” Very few tax loopholes have a trade association, but this one does. This strangely worded provision basically allows American corporations such as banks and manufactures to engage in certain lending practices and not pay taxes on income earned from it. According to this Washington Post piece, supporters of the bill include GE, Caterpillar, and JP Morgan. Steve Elmendorf, super-lobbyist, has been paid $80,000 in 2012 alone to lobby on the “Active Financing Working Group.”
…Tax credits for foreign subsidiaries – Sec. 323 is an extension of the “Look-through treatment of payments between related CFCs under foreign personal holding company income rules.” This gibberish sounding provision cost $1.5 billion from 2010 and 2011, and the US Chamber loves it. It’s a provision that allows US multinationals to not pay taxes on income earned by companies they own abroad…
There’s much more to this story, including commentary from Stoller about an “extender” for corporate
“Bonus Depreciation and R&D Tax Credit(s)” that, among other things, provides ongoing depreciation incentives for corporations. It’s noted by Stoller that these amounted to $110 billion in corporate tax savings in 2010 and 2011, alone.
Stoller directs us to a 2010 study by the Joint Committee on Taxation, which provides readers with “…an analysis of what many of these extenders cost. You can find that report here.”
Once again, I’ll let these cognitive-dissonance-free facts speak for themselves.
I don’t know about you, but a 2% payroll tax increase for Main Street versus a $205 billion sweetheart deal for Wall Street and corporate America sure as hell doesn’t look like “shared sacrifice” to me! Frankly, it looks more like bipartisan business as usual.
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UPDATE, 8:30AM, 1/2/13:
From HuffPo, last night, around the time I published this post (h/t to Kossack divineorder)...
...Though it has received little attention from the press, the White House and congressional leaders, the decision not to include an extension of the payroll tax holiday is among the most consequential, and will lead to lower take-home pay for workers. A person earning $50,000 will see roughly $1,000 less. Economists have warned that allowing the tax holiday to expire saps spending power from consumers while demand in the economy is still fragile.
Meanwhile, the deal contains a major giveaway to Wall Street, which won a 20 percent rate on dividends above $400,000, a rate that otherwise would've risen to the Clinton-era rate of 39.6. (That doesn't include an additional 3.8 percent that will be implemented to pay for health care reform, another tax hike that received little attention.)
The deal is also chock full of goodies for corporate America, including millions for NASCAR and Hollywood, and billions to extend overseas corporate tax breaks and other loopholes...
And, this from
another HuffPo article, a few hours earlier (h/t to Kossack
downtownLALife)...
...The legislation also would kill the part of Obama's 2010 Affordable Care Act designed to let millions of elderly and disabled people get help at home rather than be placed in institutional care, which tends to be more expensive.
Democrats acknowledge that the insurance initiative known as the Community Living Assistance Services and Support program, or CLASS, is financially flawed but they had argued it should be fixed rather than ended.
The House voted to repeal that provision 11 months ago...