Wait a minute! Didn’t the President say he would “close loopholes” and make the “well-off and the well-connected” pay their “fair share”? Yet Facebook, which made more than $205 billion in profits last year, will pay no corporate income taxes this year and will receive more than $400,000 in tax breaks. How does that figure? Oh wait, Facebook gave $100,000 to the Obama campaign, and CEO Mark Zuckerberg hosted the President’s first official “town hall meeting” when Obama rolled out his campaign for re-election. That probably explains a lot.
Even while President Obama bashes big business and corporate wealth, the President is in bed with the leaders of America’s biggest corporations. The special interests that have supported the President over the last five years – including Goldman Sachs, Google, and JPMorgan Chase (where the President banks as much as $1 million of his own money, according to a 2012 financial disclosure) - have found their relationshisp with the President rewarding. Companies like Microsoft and Google, who were the second and third top contributors to his re-election campaign, did well. First and fifth on that list were respectively University of California, which donated a whopping $1,212,333, and Harvard University, which contributed $663,968 to the Obama campaign .
Also on the list of companies that have won Obama’s appreciation are the law firm of DLA Piper (the largest law firm in the world), Microsoft, AIG, Kaiser Permanente, Columbia University, Stanford University, Time Warner, Verizon Communications, and Walt Disney. Google’s revenues, which were sheltered in Bermuda, soared to 10 billion untaxable dollars. And most recently it was revealed that Starbucks, Amazon and Google have been caught avoiding taxes in Great Britain, a sign of a growing sense of elitist entitlement by the President’s friends wherever they do business.
When James “Jamie” Dimon, the chairman, president and chief executive officer of JPMorgan Chase, appeared before Congress, he was flashing cufflinks that sported the presidential seal. What message was he sending to Congress by choosing to wear them on the day of his testimony?
Meanwhile, the President’s campaign promises have fooled the American people once again. Throughout his campaign he promised that there would be no new taxes on the middle class, repeating over and over again, “If your family earns less than $250,000 a year, you will not see your taxes increased a single dime. I repeat: not one single dime.” The President seems to truly believe that if he repeats a lie over and over again, it will somehow become the truth. This one no doubt played well for him in the election.
Yet even before his inauguration, middle class Americans were hit by new taxes taken out of their very first 2013 paychecks, which revealed that workers earning between $30,000 and $200,000 a year saw their paychecks reduced by anywhere from about $450 to nearly $1,800. That is an average of $1,000 a year - a great deal more than “not one single dime.
Why does no one hold the President accountable for his flagrant lies and broken promises? Economically, the President’s program has already hurt the middle class the most, while favoring the very wealthy associated with big business. It is unconscionable that he has broken his promise to the very people he promised to protect.
——– Ilana Freedman, Editor
No Corporate Income Tax for Facebook,
More Corporate Subsidies for Big Presidential Favorites
By Pat Garofalo, Think Progress
Between 2008 and 2011, 26 major corporations were able to pay no federal corporate income tax, despite making a combined $205 billion in profits. According to a new report from Citizens for Tax Justice, Facebook joined that illustrious club last year, receiving $429 million in tax rebates despite making more than $1 billion in profits:
Earlier this month, the Facebook Inc. released its first “10-K” annual financial report since going public last year. Hidden in the report’s footnotes is an amazing admission: despite $1.1 billion in U.S. profits in 2012, Facebook did not pay even a dime in federal and state income taxes.
Instead, Facebook says it will receive net tax refunds totaling $429 million.
Facebook’s income tax refunds stem from the company’s use of a single tax break, the tax deductibility of executive stock options. That tax break reduced Facebook’s federal and state income taxes by $1,033 million in 2012, including refunds of earlier years’ taxes of $451 million
Facebook will be able to carry further tax rebates forward, according to CTJ, for a total of $3 billion in tax deductions.
“When profitable corporations can use the stock option tax deduction to pay zero corporate income taxes for years on end, average taxpayers are forced to pick up the tax burden,” said Sen. Carl Levin (D-MI) when this issue arose as Facebook was preparing its initial public offering last year. This tax preference for corporations costs the U.S. about $2 billion in revenue per year.
Read the original article here.
And there is MORE . . .
Matt Stoller is a fellow at the Roosevelt Institute. You can follow him at http://www.twitter.com/matthewstoller.
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.
The negotiations over the fiscal cliff involve more than the Democrats, Republicans, the middle class and the wealthy. The corporate sector is here in force as well. One of the core shifts in the Reagan era was the convergence of wealthy individuals who wanted to pay less in taxes – many from the growing South – with corporations that wanted tax breaks. Previously, these groups fought over the pie, because the idea of endless deficits did not make sense. Once Reagan figured out how to finance yawning deficits, the GOP was able to wield the corporate sector and the new sun state wealthy into one force, epitomized today by Grover Norquist. What Obama is (sort of) trying to do is split this coalition, and the extenders are the carrot he’s dangling in front of the corporate sector to do it.
Most tax credits drop straight to the bottom line – it’s why companies like Enron considered its tax compliance section a “profit center”. A few hundred billion dollars of tax expenditures is a major carrot to offer. Surely, a modest hike in income taxes for people who make more than $400k in income and stupid enough not to take that money in capital gain would be worth trading off for the few hundred billion dollars in corporate pork. This is what the fiscal cliff is about – who gets the money. And by leaving out the corporate sector, nearly anyone who talks about this debate is leaving out a key negotiating partner.
So without further ado, here are eight corporate subsidies in the fiscal cliff bill that you haven’t heard of.
1) Help out NASCAR - Sec 312 extends the “seven year recovery period for motorsports entertainment complex property”, which is to say it allows anyone who builds a racetrack and associated facilities to get tax breaks on it. This one was projected to cost $43 million over two years.
2) A hundred million or so for Railroads - Sec. 306 provides tax credits to certain railroads for maintaining their tracks. It’s unclear why private businesses should be compensated for their costs of doing business. This is worth roughly $165 million a year.
3) Disney’s Gotta Eat - Sec. 317 is “Extension of special expensing rules for certain film and television productions”. It’s a relatively straightforward subsidy to Hollywood studios, and according to the Joint Tax Committee, was projected to cost $150m for 2010 and 2011.
4) Help a brother mining company out – Sec. 307 and Sec. 316 offer tax incentives for miners to buy safety equipment and train their employees on mine safety. Taxpayers shouldn’t have to bribe mining companies to not kill their workers.
5) 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.
6) $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.”
7) 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.
8) Bonus Depreciation, R&D Tax Credit – These are well-known corporate boondoggles. The research tax credit was projected to cost $8B for 2010 and 2011, and the depreciation provisions were projected to cost about $110B for those two years, with some of that made up in later years.
Conveniently, the Joint Committee on Taxation in 2010 did an analysis of what many of these extenders cost. You can find that report here.
Read the original article here.