EDITORIAL Nothing patriotic about raiding Treasury
The Senate faces a historic
challenge. It must decide how to respond to a House bill touted as a patriotic
response to the economic recession. The bill was triggered by the barbaric
destruction of life and property in New York and Washington on Sept. 11.
The House bill (NCR, editorial, Nov. 9) is a boondoggle. It
is a shameless attempt to take advantage of the universal mood of sorrow,
outrage and readiness to sacrifice. To quote Robert McIntyre, director of
Citizens for Tax Justice, Who would have thought that a national
emergency would set off a feeding frenzy by corporations and the
wealthy?
Now we see that the Republicans in the Senate are determined not
only to push the bill into law, but also to sweeten it further. They would
increase the $212 billion tax cuts over three years to $220 billion. Forty
percent of that $220 billion would go to the wealthiest 1 percent of Americans.
Seventy percent of the benefit of cutting the capital gains tax from 20 to 18
percent would go to the wealthiest 1 percent, almost all of it to the
wealthiest 10 percent.
Particularly outrageous is the provision that eliminates the
Alternative Minimum Tax. The history of that tax is important. A loophole
sneaked into President Reagans Tax Reform Act of 1986 had allowed half of
the largest and most profitable corporations in the country to pay no tax at
all. Public outrage led quickly to a Senate Finance Committee hearing and a
report that read: The committee finds it unjustifiable for some
corporations to report large earnings and pay significant dividends to
shareholders, yet pay little or no taxes on that income.
Congress responded with an act providing for an Alternative
Minimum Tax, ensuring that companies making a profit pay some reasonable amount
of federal income tax. The House bill repeals this legislation --
retroactively. Incredibly the Treasury would have to return to the corporations
all Alternative Minimum Tax paid since 1986.
Although the standard corporate rate tax is 35 percent, other
loopholes over the years have cut the tax the biggest corporations actually pay
far below that level. IBM last year paid 10.8 percent on profits of $5.7
billion. Eliminating the Alternative Minimum Tax will cut that to 7.6 percent.
General Electric, with $9.7 billion, paid 8 percent. It gets two-thirds of that
back. Ford, with $9.4 billion, paid 7 percent. It will apparently get all of it
back, although the statements it publishes do not allow a precise calculation.
General Motors, with $2.9 billion, paid 1.5 percent, and gets all of it
back.
The accelerated depreciation for corporations will cost the
Treasury $109 billion over three years. The major automakers get a permanent
extension of the expiring tax shelter that allows them through manipulation of
interest payments to avoid tax by shifting profits offshore.
Although the media report that the nation is in a recession, with
layoffs piling up and companies reluctant to hire, they generally downplay the
reluctance of Congress to help those who will most feel the cold and hunger of
approaching winter. Perhaps to avoid offending their owners and advertisers,
commentators seem reluctant to protest the obscenity of giving money back to
wealthy and prosperous corporations while so many live in need.
There are exceptions. Is grabbing for all you can now so
imbued in corporate culture that executives dont remember what it is to
act with honor? writes Gretchen Morgenson in The New York
Times.
White House Budget Director Mitchell Daniels, meanwhile, says that
he needs new spending cuts to prevent a deficit and is preparing lists to
sharply reduce nonmilitary programs. Fr. Brian Hehir, president of
Catholic Charities, recently said, Programs for the poor, especially the
most vulnerable, should be exempt from another round of budget cuts.
This is an important time to speak up. Our senators first need to
hear that government programs that redistribute wealth once again toward the
superrich are wrongheaded and immoral. Coming when they do, taking advantage of
a national crisis, is both outrageous and contemptible. Second, they need to
hear that the vulnerable need protection, not another round of cuts and
diminished welfare support programs.
National Catholic Reporter, November 16,
2001
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