Behind the Curtain in the Corporate State
How the recent "fairness" tax bill became a vehicle for subsidizing connected corporations.
Baucus' Finance Committee passed a bill in August extending 50 expiring deductions and credits for favored industries. At Obama's insistence, the Baucus bill was cut and pasted word for word into the cliff legislation. Set aside for a moment how this contradicts Obama's talk about "fair shares" and the need to diminish the influence of lobbyists, and look at what this raft of tax favors shows us about the Baucus Machine.
Pick any one of the special-interest tax breaks extended by the cliff deal, and you're likely to find a former Baucus aide who lobbied for it on behalf of a large corporation or industry organization.
General Electric may have been the biggest winner from the cliff deal. GE makes more wind turbines than any other U.S. company, and it lobbied hard for extension of the wind production tax credit. But more important for the multinational conglomerate was an arcane-sounding provision that became Section 222 of Baucus' bill and then Section 322 of the cliff bill: "Extension of subpart F exception for active financing income."
In short, this provision allows multinationals to move profits to offshore financial subsidiaries and thus avoid paying U.S. corporate income taxes. This is a windfall for GE: The exception played a central role in GE paying $0 in U.S. corporate income tax in 2011 when it made $5.1 billion in U.S. profits.
Peter Prowitt, formerly Baucus' chief of staff, is now an in-house lobbyist and VP at GE. GE filings show Prowitt on the lobbying teams that won wind-tax credits, electric-vehicle tax credits, and "Extension of Subpart F Deferral for Financial Services."
The examples in the article go on and on. The best way to get rich in America is not to have a great idea or work hard but to hire an ex-staffer from Senator Baucus's office.
morganovich:
and then we get obama and pelosi calling for a "scouring" of the tax code to remove deductions and loopholes and increase revenue. to do so right after passing a bill full of them is so wildly disingenuous it's hard to even know where to start.
January 7, 2013, 10:06 ambigmaq1980:
Now I see...
Saw Jeff Immelt (CEO, GE) on CNBC not long ago complaining that Congress is to "blame" for holding up getting the "fiscal cliff" resolved.
This is why it seems so nonsensical all the time to see CEOs blaming Congress (but not the WH) for not getting "things done" and generally support the notion that the economy is fine or recovering.
Big government perverts incentives, and behavior. The CEOs are lining up at the trough.
January 7, 2013, 10:57 amJohn David Galt:
I think the word you're looking for is hypocritical. Expecting their supporters to fall for the notion that only evil Republicans enact these things isn't stupid at all, it's just Machiavellian -- because their supporters ARE that stupid, and they own enough media to keep them that way.
January 7, 2013, 9:08 pmWhat the...:
FYI, some additional commentary on the PTC from Bloomberg New Energy Finance newsletter ...
The New Year began with a bang for the clean energy industry with US legislators extending the Production Tax Credit, or PTC, for wind on the very first day of 2013. The fine print of the one-year extension revealed another upside: projects need not be completed by 31 December 2013 but can be "under construction" to be eligible for the USD 22/MWh credit. This effectively extends the benefit to two years or even two-and-a-half years and could lead to the addition of 3GW of new wind capacity in 2013 and as much as 8GW in 2014, according to Bloomberg New Energy Finance projections.
Wind project developers also have the option of opting for the Investment Tax Credit on their capital expenditure instead of the PTC, provided they have started construction by the end of the year. This is especially welcome to offshore wind developers who prefer an investment tax credit over a production credit since they have higher capital costs per MW and longer construction cycles. 'The American Taxpayer Relief Act of 2012' also reintroduced the USD 1/gallon biodiesel tax credit and extended the USD 1.01/gallon biofuel production tax credit, in addition to keeping intact the tax credit for energy efficiency improvements to existing homes.
January 8, 2013, 8:27 am