GTFOHWTBS! Wall Street wins…again. We knew politicians were shady as hell but, to throw in perks for banks like Morgan Stanely, that have already been bailed out by US already, is just a cotdayum slap in the face! And according to The Huffington Post , there’s a loooong azz list of other tax breaks for that 1% that we couldn’t even try to pull with Uncle Sam: The 11th-hour deal to avert the so-called fiscal cliff preserved billions of dollars in corporate tax giveaways even as it slashed take-home pay for millions of American workers. Tucked inside the last-minute fiscal cliff package were more than a dozen tax loopholes, many of which will benefit Wall Street financial firms and some of the nation’s biggest corporations. These breaks will cost hundreds of billions of dollars in the coming year, underscoring the lobbying power of corporate interests. The deal was less kind to the middle class. Congress permitted a cut in the payroll tax to expire, meaning that the tax burden for the average worker will increase about $1,000 in 2013. “This shows that the lobbyists are able to get what they want even when everyone else is starving,” said Phineas Baxandall, senior analyst for tax and budget policy at the U.S. Public Interest Research Group. “It also shows they are best able to get what they want when no one else is paying attention.” The corporate loopholes were part of a package of so-called tax extenders tacked onto the main bill. The extenders package, first approved by the Senate in early August, mixes popular benefits, like a deduction for teachers who buy classroom supplies, with corporate-friendly carve-outs, such as the “active financing” exception that permits businesses earning interest on overseas lending to defer U.S. taxes on that income indefinitely. There is even a tax break for construction of new racetracks. The tax extenders were passed for only one year, and they still need to clear another potential hurdle: upcoming negotiations over mandated spending cuts and the debt ceiling. President Barack Obama and congressional leaders have indicated they’d like to see a “grand bargain” on taxes, which would feature lower overall rates but close a slew of loopholes. The financial services industry, whose leaders had earlier joined a group of other corporate executives pushing for a “fair” solution to the fiscal crisis, is one of the primary beneficiaries of special-interest tax breaks. The active-financing exception, for example, permits banks like Morgan Stanley to avoid the 35 percent U.S. corporate tax rate on interest income from money lent overseas. A handful of other U.S.-based multinational companies with financing arms, such as Ford Motor Co. and General Electric, also use that exemption to lower their tax bills. The two-year cost to taxpayers is an estimated $11.2 billion, according to the congressional Joint Committee on Taxation. U.S. financial institutions argue that the active-financing exemption is necessary for them to compete in overseas markets with foreign banks that carry a lower tax burden. The loophole was repealed in the Tax Reform Act of 1986, but was reinstated in 1997 as a temporary measure after fierce lobbying by multinational corporations. According to Citizens for Tax Justice, the financial services industry paid an average effective tax rate of 15.5 percent from 2008 to 2010, far lower than that of most other industries. As part of the fiscal cliff deal, Congress also extended another little-known tax break that benefits large multinationals selling products through overseas affiliates. This “pass-through” exemption permits a U.S.-based company to set up a new corporation in a tax haven like the Cayman Islands and sell it a patent owned by the U.S. parent company. Royalties on overseas licensing of that patent would then route to the tax-sheltered firm, instead of the U.S. parent company. The Joint Committee on Taxation says the two-year cost of extending this shelter is $1.5 billion. One of the more unusual tax benefits in the fiscal cliff legislation is a longstanding carve-out for racetracks used by NASCAR. Since 2004, Congress has passed a series of stopgap measures that allow owners of motorsports complexes to accelerate their depreciation expenses. This means that owners can deduct more in expenses, reducing the taxes they must pay. Track owners and NASCAR together have spent hundreds of thousands of dollars lobbying for the tax benefit over the past five years, according to lobbying disclosure forms. The International Speedway Corp., which owns and manages NASCAR race tracks, has spent more than $1.1 million lobbying Congress since 2008. Over the same period, NASCAR spent more than $300,000 on lobbying efforts, which included a push to “make permanent the depreciation classification.” Supporters in Congress and industry groups have argued that the tax break is necessary to “maintain the current standard expected by our competitors and fans.” According to estimates by the Joint Committee on Taxation, the so-called NASCAR loophole will cost taxpayers $46 million this year and an additional $95 million through 2017. A spokesman for the International Speedway Corp., Charles Talbert, said the industry is simply seeking to preserve a tax designation it has relied on for years. He said in an email that racetracks had always used the accelerated depreciation schedule, but Congress had specifically written it into law after the Internal Revenue Service argued that it was improper in the early 2000s. Though Congress was willing to sign off on all these business-friendly goodies, legislative leaders couldn’t muster enthusiasm for extending the payroll tax holiday, which had cost the federal government $120 billion each year in lost revenue. As a result, a worker who earns $50,000 a year will now pay at least $80 per month in taxes. The payroll tax increase will affect as many as 160 million people. These bullsh*t excuses corporations can throw around in order to get a tax break are inexcusable. The Senate, Congress, and The Pres should all be ashamed of themselves. Images via tumblr
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The Side-Eye: That Fiscal Cliff ‘Deal’ Snuck In A Whole Lot Of Perks For Wall Street…And NASCAR?!?!
