IN THE PUBLIC INTEREST:
Remember that brief dustup during the 1992 Presidential campaign about how little in federal taxes that foreign companies pay because of all the ways they can maneuver their books and engage in pricing transfers to artificially increase their costs in the U.S. The estimates of taxes they should have paid ranged from $3 billion a year to seven times that number.
Well, nothing has been done about this problem since. Neither Gingrich, nor Dole nor Clinton have dealt with this issue or related tax loopholes for corporations. So, last week, Taxwatch, a broad coalition of environmental, community, consumer and religious organizations sent Congress a list of 12 corporate tax breaks and loopholes, totalling $91.1 billion over five years, which the coalition believed should be ended.
Consider some of these generous displays of Congressional favoritism passed years ago and greased by campaign dollars.
--Companies can declare income from U.S. exports as foreign income to increase the amount of foreign tax credit that the company can take against U.S. taxes. That lets them keep $18.6 billion over five years.
--U.S. exporters are permitted to exempt a portion of their export income from U.S. taxation. This lets them keep $7.7 billion over five years.
--There is no minimum tax on foreign-owned businesses, as there is on domestically-owned companies. This costs the Treasury $1.9 billion over five years.
--The percentage depletion for oil & gas and other fuels and minerals allows companies to deduct more than the value of their investment. Total up another $3.3 billion over five years.
What about ending the deductibility of business entertainment expenses which can include tickets to sporting events, alcohol, tobacco, dancers and African safaris? Instead of competing on the merits, companies that choose to compete on lavish entertainment to win their sales should do so on their own ticket. That will save more billions of dollars that you wouldn't have to pay.
Whenever companies receive special tax loopholes, other taxpayers either make up the difference, or the deficit gets larger or services are reduced. The Taxwatch letter to Senators and Representatives put it concisely: "Citizens all over the country are concerned about corporate welfare and the fact that special interests can avoid paying their fair share in taxes." Early in this century, reformers call such favoritism the spoils of privilege.
Three months ago, the Congressional Budget Office issued a report titled "Federal Financial Support of Business." The report stated that "federal activities to aid business represent both a claim on federal budgetary resources and, in the case of several industrial sectors, a sizable share of their contribution to the economy." These include a wide and complex variety of programs that include spending, credit and favorable tax treatment programs.
Corporate welfare is booming. At the federal level, it takes directly and indirectly far more of your tax dollars than the much-maligned poverty welfare programs such as food stamps and children's assistance.
Yet because of the very complexity of these subsidies and the unwillingness of the media to explain them clearly and repeatedly, the corporate lobbyists can assure their continuance. The nearly two billion dollar sugar subsidy came under Congressional attack earlier this year by the Republicans in the House. The sugar lobby won.
Even a $2 million taxpayer subsidy to support the mink industry at Paris fashion shows overcame a repeal drive.
Where was the media? Reporting the O.J. Simpson trial with such massive time allowances that, together with other similar "big story" trials crowded out other news day after day that was certainly important enough to warrant coverage.
There is no substitute for taxpayer watchdog groups in every Congressional district. No way can these groups--dedicated and organized--be crowded out of the politicians' radar screen.
For a free copy of Taxwatch's October 3, 1995 news release, send a self-addressed stamped envelope to Taxwatch, Suite 413, 910 17th Street, NW, Washington, D.C. 20006.
THE PROGRESSIVE POPULIST