An army of corporate lobbyists is trying to push a huge package of tax cuts through Congress without drawing public attention.
The 55 cuts, known on Capitol Hill as “extenders,” expired at the end of 2013 but in the past have been renewed retroactively on a bipartisan basis with little fanfare. Altogether, according to the Congressional Budget Office, they could cost the federal government $46 billion in revenues in 2014 and as much as $700 billion over the next 10 years. While some of the breaks would help working people, 90 percent of them would benefit the bottom lines of large, US-based multinationals.
A report released on Monday by Americans for Tax Fairness and Public Campaign calculates that, “1,359 individual lobbyists swarmed Capitol Hill to press members of Congress on the issue between January 2011 and September 2013.” Lobbyists appeared “12,378 times in quarterly lobbying reports in the period studied – each report representing from one to dozens of contacts with members of Congress and their staffs during the quarter it was filed.”
Arguably the most controversial of these tax breaks is known as the Active Financing Exception loophole (AFE), which allows companies to avoid paying taxes on interest and dividends earned on overseas cash. Lobbying for the AFE has been especially intense.
Dubbed the “GE loophole” by critics, the report says that General Electric “employed 48 lobbyists to work on tax extenders and… the AFE” — more than any other corporation. The authors note that while ”it is not possible to know how much the AFE saves GE,” the loophole played a significant role in the company paying “less federal income taxes than an average American family pays in one year” on profits of $27.5 billion earned between 2008 and 2012.
According to the report, “58 percent of the lobbyists who worked on tax extenders have passed through the revolving door – they have worked for Congress or the executive branch.” They include former Sen. John Breaux (D-LA) — who sat on the Senate Finance Committee — and former Senate Majority Leader Trent Lott (R-MS).
The tax study was released on the same day that Sen. Carl Levin (D-MI) released a report detailing how Caterpillar Inc. “used complicated corporate maneuvers to avoid $2.4 billion in U.S. taxes by parking profits in a unit in Switzerland.” According to a report by ISI Research, S&P 500 companies currently have $1.9 trillion parked in offshore tax havens.
While Republicans have insisted that everything from an extension of unemployment benefits for the long-term jobless — which would cost the government about half of the total value of the tax cuts — to Hurricane Sandy relief funds must be paid for with “offsets” in spending elsewhere, lawmakers from both parties appear ready to pass the package of costly “extenders” on their own.
Just weeks after opposing the unemployment extension, Senate Minority Leader Mitch McConnell (R-KY) said of the tax cuts, “I think occasionally these packages have been paid for, but most Republicans believe that existing tax policy should not be paid for.” As Danny Vinik reported for New Republic, “McConnell alone has received more than $100,000 in total from the top 10 companies who have lobbied most intensely” for the corporate tax loopholes.
For more information, visit Americans for Tax Fairness.